What is IBR?
Income-Based Repayment (IBR) is a federal student loan repayment program that bases monthly payments on income and family size. It is designed to make student loan payments more manageable for borrowers who may have lower incomes or high loan balances.
How Does IBR Work?
Under IBR, eligible borrowers pay a percentage of their discretionary income towards their student loans each month. After a certain period of time, any remaining loan balance may be forgiven.
Benefits of IBR
- Lower monthly payments
- Potential loan forgiveness
- Income-based repayment
IBR Example
For example, if a borrower’s discretionary income is $30,000 per year and they have a family size of 4, their monthly IBR payment may be capped at 10% of their discretionary income, resulting in a more affordable monthly payment compared to a standard repayment plan.
Case Studies
One case study found that after enrolling in IBR, a borrower’s monthly payment decreased from $500 to $200, making it easier to manage their student loan debt alongside other expenses.
Statistics on IBR
According to data, over 2 million borrowers are currently enrolled in IBR, demonstrating its popularity among federal student loan borrowers seeking repayment options based on their income.
