Income-Based Repayment (IBR) and Free Internet Service

Income-Based Repayment (IBR) is a federal student loan repayment plan that adjusts your monthly payment based on your income and family size. With an IBR plan, your payment amount will be capped at the lower of a certain percentage of your discretionary income or the amount you would pay under the 10-year Standard Repayment Plan.

Does everyone qualify for income-based repayment?

To qualify for IBR, a borrower must demonstrate a “partial financial hardship.” A formula using adjusted gross income (AGI), family size and state of residence will determine how much a borrower is able to pay.

The percentage of your discretionary income will be:

• 15% if you borrowed before July 1, 2014
• 10% if you borrowed on or after July 1, 2014

Your monthly payment will also be capped at 15% of your discretionary income if you have a total federal student loan debt of less than $30,000.

Discretionary income is defined as your adjusted gross income (AGI) minus 150% of the federal poverty line for your family size and state of residence.

If you enroll in an IBR plan, any remaining balance on your loans after 20 or 25 years (depending on the plan you choose) will be forgiven.

To qualify for IBR, you must meet the following requirements:

• You must have federal student loans
• You must have a partial financial hardship. This means that your monthly payment under the Standard Repayment Plan would be more than 10% of your discretionary income.
• You must make your monthly payments on time and in full for the first 12 months of your repayment plan.

If you think you might qualify for IBR, you should contact your loan servicer to see if you are eligible. You can also use the Federal Student Aid website to calculate your monthly payment under an IBR plan.

Here are some of the pros and cons of IBR:

Pros:

• Your monthly payments will be lower than they would be under other repayment plans
• Any remaining balance on your loans after 20 or 25 years will be forgiven

Cons:

• Your payments will be spread out over a longer period of time, so it will take you longer to repay your loans.
• You will have to recertify your income and family size annually to keep your payments affordable.

If you are struggling to make your student loan payments, IBR may be a good option for you. However, it is important to weigh the pros and cons before making a decision.

If you are already enrolled in Income-Based Program / IBR then you are eligible for the Affordable Connectivity Program or ACP.