Stafford Loan Income Based Repayment Plan

Students with Stafford Loans that are having a difficult time repaying their loans should consider the Income Based Repayment Plan.  This Plan is offered to Stafford loan borrowers that have a high student loan debt level relative to income and family size.  If you are experiencing difficulties repaying your Direct or FFEL Stafford Loan then you may want to consider the Income Based Repayment Plan that is offered through the federal government. 

Income Based Repayment Eligibility

Students that have a high Stafford loan debt level relative to their current income and family size may be eligible for the Income Based Repayment Plan. 

Your Stafford Loan Lender will determine if you qualify based on the IBR application that is submitted.  This application takes into account your current income level, your family size, and you total Stafford Loan debt level.  They will complete a calculation to determine your new monthly repayment amount based on their information given in the application.  If that Income Based Repayment amount is lower than the monthly repayment amount that you currently have on all your current Stafford Loans then you are eligible to repay your loans under IBR.

If you are married and you and your spouse file a joint federal tax return, and if your spouse also has IBR-eligible loans, your spouseís eligible loan debt is taken into account when determining whether you are eligible for IBR.
Income Based Repayment Benefits

Students that qualify for an Income Based Repayment Plan will be able to repay their Stafford Loans over the course of 25 years.  All outstanding Stafford Loan amount remaining after 25 years will be forgiven and no additional payments will be necessary.  Beginning in 2012, all new Stafford Loans can be repaid over the course of 20 years and any remaining balance remaining will be forgiven due to President Obamaís Student Loan reform.

Stafford Loan borrowers that qualify for a Stafford Loan Income Based Repayment Plan can also have their student loans capped at 15 percent of their adjusted gross income.  This 15 percent student loan cap could potentially save borrowers hundreds of dollars a month.  Also, beginning in 2012, qualified borrowers will be capped at only 10 percent instead of the current 15 percent of their adjusted gross income, which means additional savings for the borrower.  The decrease in the cap was originally suppose to start in 2014, but due to tough economic times President Obama lowered the student loan cap starting in 2012.
Income Based Repayment Plan Application

In order to become eligible for the IBR program, students must contact their loan servicer (lender) to see what qualifications and requirements are needed.  Each lender have different requirements, so itís important that you communicate with your lender directly.

Most lenders request applicants to complete an IBR plan application along with income documentation.  It usually takes several weeks for the lender to make a determination of eligibility.  If you are unable to repay your student loan and you have heard from your lender then you should contact your lender of possible deferred payment options.  Itís important to you contact your lender to review all your options or your credit score may be negatively impacted and your chance of a IBR plan may be limited.  In order to be eligible for the IBR plan, students cannot be in default or late in student loan repayment.

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