Student Loan Program Helps Struggling Borrowers

A much-anticipated Income Based Repayment Program (IBR) could be the answer you've been waiting for if you are a student loan borrower with a relatively high remaining balance on your loans.
 
The program, which went into effect July 1, 2009, offers borrowers the chance to keep student loan payments affordable using a sliding scale of payment caps based on a borrower's full-time work income and size of family. According to www.ibrinfo.org, most borrowers accepted into the program will make payments less than 10 percent of their income. Loan payments of higher earners could be capped at 15 percent of earnings above that amount. With the exception of the highest earners, payments could end up being less than 10 percent of the borrower's total income. If you are a graduate currently paying your student loans under a different program, you may join IBR.
 
In addition, IBR will forgive remaining debt after a certain period of time depending on your career field. For example, employees in public service jobs including government and nonprofit 501(c)(3) organizations could be forgiven their loan balance after 10 years of responsible participation in IBR. Those in other career fields may be forgiven their loan balances after 25 years of qualifying payments.
 
A variety of factors determine eligibility and are detailed at www.ibrinfo.org. Among the criteria considered is the borrower's family size and Adjusted Gross Income (AGI). If the borrower is married AGI must include the spouse's income (whether or not the spouse has student loan debt or not) unless the borrower files taxes separately from his/her spouse.
 
Other criteria includes debt-to-income ratio, you must have relatively low income and a higher balance left on your loan. Federal student loans eligible for IBR include Direct or Federal Family Education Loans (FFEL) loans, Stafford loans and Consolidation or Graduate PLUS loans. Perkins loans will be eligible if you consolidate them into a federal Guaranteed or Direct loan.
 
Those with loans in default, Parent PLUS loans, private loans or loans that consolidated a Parent PLUS loan will not be eligible for the program.
 
To apply for IBR you must contact the lender(s) who hold your student loans. The lender will ultimately determine eligibility. If you are accepted, keep in mind that you may end up paying more interest in the long-run since a reduced payment will extend your repayment period. You must also submit annual documentation regarding proof of full-time employment income and family size.
 
For more information on the application process and further details regarding the IBR program, go to www.ibrinfo.org. The site features an IBR calculator to help you estimate eligibility. However, you must contact your loan provider directly to sign up for the program. If you do not qualify for the program or for more information if you are struggling with student loan repayment, visit the National Consumer Law Center's Student Loan Borrower Assistance Project at www.studentloanborrowerassistance.org.