Income-Based Repayment (IBR)

The Income-based Repayment (IBR) Plan offers you a way to reduce monthly student loan payments to 15 percent of your discretionary income, with the potential for total student loan forgiveness if you qualify.

IBR is an income-driven repayment plan that came into effect in July 2009. Originally part of the College Cost Reduction and Access Act, the IBR Plan was signed into law by President George W. Bush in 2007. While highly popular as a student loan repayment and forgiveness plan, IBR was revised in 2015, expanding the program to include new borrowers.

How to Qualify for the IBR Plan

In order to qualify for the original IBR Plan, you first need to determine if your federal student loans meet the plan’s requirements. Student loans eligible for the IBR Plan include:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans made to graduate or professional students
  • Direct Consolidation Loans not used to repay any PLUS loans made to your parents
  • Subsidized Federal Stafford Loans from the FFEL Program
  • Unsubsidized Federal Stafford Loans from the FFEL Program
  • FFEL PLUS Loans made to graduate or professional students
  • FFEL Consolidation Loans not used to repay any PLUS loans made to your parents
  • Consolidated Federal Perkins Loans

Private loans, parent loans, or federal student loans originating on or after July 1, 2014 are ineligible for the IBR Plan.

Another requirement of the Income-based Repayment (IBR) Plan is demonstrating a partial financial hardship. This is determined by comparing your Adjusted Gross Income (AGI) against 150 percent of your state’s poverty level for your family size.

Find out if you can take advantage of the IBR Plan for free.


How the IBR Plan Works

The IBR Plan caps monthly student loan payments at 15 percent of discretionary income based on your annual salary, your household size and your state’s poverty level. While this amount is revised annually to reflect any changes in these areas, in some cases monthly student loan payments could be as low as $0 if you meet certain requirements.

Also, under IBR, your monthly payments will never be higher than those made under a standard 10-year repayment plan.

Another benefit of the IBR Plan is your ability to obtain complete student loan forgiveness after 25 years of qualifying payments under the program. This means that if you have a remaining balance after 25 years of student loan repayments through IBR, no more payments will be required, and the balance will be forgiven. However, any student loan balances receiving forgiveness will be considered taxable income by the IRS.

For more details on the IBR Plan, speak with an IBR specialist by phone at (800) 771-6358