Over the past several years, the Obama Administration has worked to improve repayment options available to responsible student loan borrowers. Since 2009, former students have been able to enroll in an “Income Based Repayment” (IBR) plan to cap their student loan payments at 15 percent of their current discretionary income if they make their payments on time.
In 2010, President Obama signed into law an improved income-based repayment plan that would lower this cap to 10 percent of discretionary income for students who take out loans after July 1, 2014. Then, last October, the President announced an executive action to make that lower cap available to more borrowers by the end of 2012, rather than 2014. The latest change will likely reduce monthly student loan payments for more than 1.6 million responsible student borrowers.
Despite these opportunities and policy improvements to help graduates make their monthly payments, too few responsible borrowers are aware of their repayment options. Even among borrowers who understand their options, many have difficulties navigating and completing the application process.
Today, President Obama is introducing a Presidential Memorandum that will help educate more students about their loan repayment options and streamline the IBR application process. Read through the questions below to learn more about income based repayment and how these changes might affect you.
1. What is income-based loan repayment?
Income-Based Repayment (IBR) is a repayment plan that caps your required monthly payments on the major types of federal student loans at an amount intended to be affordable based on income and family size. All Stafford, Grad PLUS, and Consolidation Loans made under either the Direct Loan or Federal Family Education Loan programs are eligible to be included in the program. Non-federal loans, loans currently in default, and Parent PLUS Loans are not eligible for the income-based repayment plan.
The program lowers monthly payments for borrowers who have high loan debt and modest incomes, but it may increase the length of the loan repayment period, accruing more interest over the life of the loan.
2. Who qualifies for IBR?
IBR helps people whose federal student loan debt is high relative to income and family size. Currently, your loan servicer (the company you make your loan payments to) determines your eligibility, but starting in September 2012, students won’t have to contact their loan servicer to apply—they will be able to apply directly through the Department of Education’s website, thanks to a new directive from President Obama.
You can use the U.S. Department of Education’s IBR calculator to estimate whether you are likely to qualify for the plan. The calculator looks at your income, family size, and state of residence to calculate your IBR monthly payment amount. If that amount is lower than the monthly payment you are paying on your eligible loans under a 10-year standard repayment plan, then you are eligible to repay your loans under IBR.
Fonte: White House