Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Mar 22, 2022

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Amidst the recent uprise against the student loan industry, current students are graduates need to know what options they have available to them. The horror stories told by participants’ of the Occupy Student Loan campaign sound tragic, but is there something that can be done now to alleviate the financial suffering these individuals are undergoing?

The government introduced the Income-Based Repayment program (IBR) in the summer of 2009. Since then, eligible students have been granted reduced monthly payments and the promise that their student loans will be entirely forgiven, regardless of outstanding balance, after 25 years of good standing in the program.

What exactly is the IBR?

The IBR is a program designed to help students manage the sometimes high monthly payments on government student loans. If a borrower qualifies for the IBR, their monthly payments get capped at a manageable amount, determined by the borrower’s income and family size.

Depending on income and family size, some borrowers may even be eligible for a payment of $0 per month.

In addition to capping the monthly payment, the IBR also cancels borrowers’ debt after 25 years of good standing in the program.

If a borrower is a part of the Direct Loan Public Service Loan Forgiveness (PSLF) Program, then the payments for IBR also count towards the 120 required payments for that program.

In the event the IBR payment cap doesn’t cover the full amount of interest accruing on borrowers’ loans, the government will pay that accrued interest for up to three years beginning from borrowers’ starting date in the IBR.

Ultimately, this program one designed to help borrowers pay back their educational financing on a manageable and fair payment schedule.

How Do I Qualify for the IBR?

In order to participate in this debt relief program, borrowers must have high student loan debt compared to their income and family size. Borrowers must also have government backed loans: Stafford, Grad Plus, federal consolidation loans (not including Parent PLUS), Direct, or Federal Family Education Loans (FFELs).

The U.S. Department of Education’s IBR Calculator allows borrowers to receive an estimation of how much the IBR will help them. By inputting marital status, gross income, loan amount, interest rate, and family size, borrowers will receive an estimated monthly payment amount they would be eligible for under the IBR program. The calculator also gives a phone number to use if interested in applying for the program.

Why is the IBR necessary?

The IBR was created as a result of the financial crisis and soaring unemployment rates that the nation has experienced in the past few years. Borrowers would attend college, acquire tens of thousands (if not more) in student loan debt, then find themselves with no means to repay that debt.

Many college educated borrowers had families and other bills, forcing them to prioritize other expenses over their student loans. As a result, interest continued to accrue, and students found themselves in massive debt traps.

In recent news, movements in support of students and graduates have been on the rise. Given encouragement by Occupy Wall Street, the modern day equivalent of the 1960 Berkley riots, several websites and organizations are fighting back against the major student loan providers.

Participants plead to the public’s sympathy by showing personal bank statements on the web. These loan receipts reveal years of constant payments, but a current balance still higher than the original loan amount.

Opponents to these movements claim the debt holes these individuals have found themselves in is nobody’s fault but their own.

Regardless of where blame lies, the government recognizes that this is a problem, and is responding with new programs and updates to existing programs to help ease this financial suffering.