SafeHarbor Financial | Income Based Repayment Program
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Income Based Repayment Program

The Department of Education offers a variety of loan repayment options designed to make payments more manageable. One of their most popular repayment programs is the Income Based Repayment Program.  

What are the Benefits of the Income Based Repayment Program (IBR)?

The major benefit is that your new payment will be based on your earnings and family size. The total amount you owe on your federal student loans is only considered when determining the extent of your financial hardship.

Another big benefit is that regardless of how much you pay over the loan repayment period, whatever loan balance is remaining at the end of the term of the loan will be completely forgiven. This can mean a savings of thousands of dollars!


The amount of your new monthly payment will not be higher than 10 to 20 percent of your discretionary income if you were a new borrower on or after July 1st 2014. If your loans were taken out prior to this date, then 15% of your discretionary income is used to calculate your new monthly payment amount. This payment will not be higher than what you were originally paying under the standard 10-year repayment plan. This is great for those who exit college with a huge loan balance and are hit with payments they cannot afford while looking for work, for example.

What Loan Types Qualify?

Eligibility for the Income Based Repayment Program (IBR) is dependent upon the types of loans you have taken out for your education and when they were taken out. The following Federal Student Loans from the Direct Loan and Federal Family Education Loan (FFEL) Programs will qualify for the Income Based Repayment Program:

  • FFEL PLUS Loans (Graduate and Professional Students)
  • FFEL Consolidation Loans without PLUS Loans made directly to parents (not just as cosigners).
  • Direct PLUS Loans (Graduate and Professional Students)
  • Direct Consolidation Loans without PLUS Loans made directly to parents (not just as cosigners).
  • Direct Subsidized Loans
  • Direct Unsubsidized Loans

If you do not have one of these loan types, you may still be eligible for the Income Based Repayment Program by first consolidating your federal student loans into the Direct Loan program. Safe Harbor will certainly help you with this task – just give us a call at 1-855-569-4009.

How Does Interest Forgiveness Work?

If your new monthly payment isn’t large enough to pay the accruing interest on any subsidized portion of your direct loan, the Federal government will pay it for you for a period of up to, but no more than, three consecutive years once you begin you are accepted into the Income Based Repayment Program (IBR). This is one of the many forgiveness aspects that Federal Student Loans offer.


What is End of Term Forgiveness?

A 20 year forgiveness plan is available for new borrowers that took their loans out after July 1, 2014, or 25 years if the loans were taken prior to July 1, 2014. The lifetime of an Income Based Repayment Loan is considered to be no more than 25 years. If over the lifetime of this loan, you make 300 qualified payments and the loan is still not completely paid off, any remaining loan amount will be forgiven and legally discharged. However, this discharged amount is considered taxable and must be paid for the year it was forgiven (i.e. a loan discharged in 2015 must be paid with other 2015 income taxes due in 2016).

Is It True that Certain Public Sector Occupations Receive 120-Month Forgiveness Plans?

Yes. In 2007 congress created the Public Service Loan Forgiveness Program (PSLF) thanks to the College Cost Reduction and Access Act. This program is designed to reward and encourage highly qualified graduates to pursue careers in the public service sector, or with non-profit organizations. If you qualify for the program, you will be required to make 120 on-time payments (10 years), and the balance remaining of your student loans will be forgiven *The Public Service Loan Forgiveness Program (PSLF) is only applicable to federal student loans. Click here to read more about the Public Service Loan Forgiveness (PSLF) Program.


Get Started Today!

The benefits offered by the Income Based Repayment Program are extensive and designed specifically to help individuals and families in financial need while ensuring that the Federal Student Loan Program remains healthy and available for future students.

Safe Harbor is a full service financial planning firm. Our primary goal is to help you – the client – no matter where you are on your path to creating financial security, identify specific financial goals such as creating more cost effective ways to pay off your student loans. We then assist you with the actual process of identifying the most efficient way of accomplishing this objective and helping you save thousands of dollars in the process.

So take the time and give us a call. Our specialists will pull up your loans, explain your options through consolidation and tell you exactly what your benefit would be in just a few minutes, and there is no obligation find out just how much you can save. Call today 1-855-569-4009.