Certain loans may be eligible if the borrower is experiencing hardship due to a lack of sufficient income or temporary increase in monthly expenses. Hardship: The interest rate is temporarily reduced for 6 months to lower your Minimum Monthly Payment amount, subject to a $50.00 minimum.
Federal student loan borrowers pay a percentage of their discretionary income – 10%, 15% or 20% – depending on the specific income-driven repayment plan you choose. Discretionary income is what you have left after taxes and an allowance for necessary spending, such as food and shelter. This means they can take your federal and state tax refunds or a portion of your disposable income. You lose eligibility for additional federal student aid and repayment options such as Income-Driven Repayment (IDR) plans, deferment, and forbearance. The U.S. Department of Education or guarantor can take other legal action against you. This plan requires that you have a “partial financial hardship” as defined on the Income-Driven Repayment Plan Request. After 20 or 25 years (depending on the terms of your loan) of qualifying payments, your remaining loan balance is eligible for forgiveness. Assuming annual income growth of 3.5%, your final monthly payment would be —. After making payments for — years, you will have paid a total of — and would receive — in forgiveness, compared to your current plan where you will pay — over the next — years. The Complete Guide to Income-Driven Repayment Plans Income-Based Repayment. The IBR plan also requires your payment amount to be less than you’d pay with the standard plan. With IBR, your monthly payment will be 10 or 15 percent of your discretionary income, and your balance is forgiven after 20 years if you took out the loans on or after July 1, 2014. For many borrowers, the best income-driven repayment plan is the one with the lowest monthly loan payments. But with four different options, figuring out which has the lowest monthly payments can be challenging. Changes in income and marital status can affect the total cost of the loans, as can plans to enroll in graduate school. Income-driven repayment plans are designed to make repaying your student loan debt more manageable by reducing your monthly payment amount. They are based on your income, family size, and federal student loan debt. If you need to make lower monthly payments, we recommend that you repay your loan(s) under one of the following income-driven plans. Income-Based Repayment (IBR) is a federal student loan repayment program that adjusts the amount you owe each month based on your income and family size. With an IBR plan, your payment amount will be capped at a certain percentage of your discretionary income or the amount you would pay under the 10-year Standard Repayment Plan.