Borrower Counseling Group
617.728.4200, ext. 5009
Mon - Thu: 8:00 a.m. - 10:00 p.m.
Fri: 8:00 a.m. - 5:00 p.m.
Sun: 11:00 a.m. - 10:00 p.m.
Please note: All times Eastern.
If you have high student loan debt, a low income level, or both, it can be difficult to follow a standard repayment schedule. Income-based repayment (IBR) may be able to help you.
IBR bases your payments on your income and family size—essentially customizing your payments to your situation.
How It Works
- You must display partial financial hardship to qualify for IBR.
- Hardship is determined by reviewing your monthly payment amount of all your eligible loans under standard repayment against your discretionary income.
- If you qualify, your payments will be capped at no more than 15% of your discretionary income.
- Your repayment amount could change annually, based on changes in your financial situation.
- There is no minimum payment with IBR.
- You are still responsible for interest that builds up over the length of your payment period.
- After 25 years of repayment and 300 eligible payments, any outstanding balance will be forgiven. (It is possible to repay the loan in full before 25 years have passed.)
See what your payments could look like under this schedule with our IBR calculator.
Changing Your Repayment Plan
To apply for IBR, you will need to fill out an income-based repayment application—Federal Family Education Loan Program application (pdf, 0.1 MB), Direct Loan progam application (pdf, 0.28 MB)—and return it to your servicer. You will also need to provide information about your family size, income, and taxes, including filling out IRS Tax Form 4506-T.
IBR uses your tax information to determine your income and your payments. If your financial situation has changed since you filed your taxes, you can adjust your payments by submitting the appropriate alternative documentation of income form: Federal Family Education Loan Program form (pdf, 0.08 MB), Direct Loan Program form (pdf, 0.12 MB).
If you’re not sure whether your loans are from the Federal Family Education Loan Program or the Direct Loan program, learn about the difference between these key industry players.
You can also contact American Student Assistance® (ASA) about applying for IBR—we can direct you to the right forms and help you fill them out correctly.
IBR is available to you whether you are in the William D. Ford Direct Loan Program or the Federal Family Education Loan Program. Most federal loans are eligible, but there are a few exceptions.
- Subsidized and unsubsidized Stafford loans
- SLS loans
- Grad PLUS loans
- Consolidation loans without underlying Parent PLUS loans (Perkins loans may be included).
Ineligible loans include:
- Parent PLUS loans
- Consolidation loans with underlying Parent PLUS loans
- Perkins loans, unless they are included in a Consolidation loan
- Private, state, and other non-federal student loans
- Loans in default
Remembering Your Anniversary Is Important
You will need to reapply annually if you wish to remain in any of the “income-driven” repayment plans (Income-Contingent, Income-Sensitive, Income-Based and Pay As You Earn). This means that you must update your income information every year before your annual anniversary of enrolling in the program so that your monthly payment amount for the next year can be determined. Your loan servicer will send you a notification to provide documentation of your Adjusted Gross Income (AGI) and to self-certify your family size no later than 60 days and no earlier than 90 days prior to your annual deadline.
The notice will also contain:
• Your annual renewal deadline
• The consequences to you if the servicer does not receive your renewal information
• Your new monthly payment amount and effective date if you no longer qualify for or miss the annual deadline
• An explanation that unpaid accrued interest will be capitalized at the end of your current annual payment period
Missing your deadline can result in a much higher monthly payment than your income-driven payments as well as a significant amount of interest capitalizing, or being added on to, your loan balance. Be sure to make note of your anniversary date and proactively contact your servicer if you don’t receive this notification.