Burden of loans lifted from students

The government’s new Income-Based Repayment program (IBR) that went into effect on July 1 of this year has made it easier for students with low income jobs after college to pay for their student loans.

As stated in the U.S. News and World Report, IBR “will allow those with small paychecks or big debts to cap their monthly payments at less than 15 percent of their income.” Graduates who go into public service jobs or work for the government may even have some of their loans “forgiven” and won’t have to pay anything.

IBR acts like a sliding scale and the amount loan borrowers pay each month is adjusted depending on income and family size. If a borrower is married, IBR factors in the income of both spouses, and the plan does take into consideration whether or not both individuals have student loans.

According to Nick Perry of the Seattle Times, “the program encompasses federal loans that account for about two-thirds of all student debt. Private loans taken out by students and federal loans taken out by parents do not qualify. If people are already in default on their loans, they won’t qualify for the program, either.”

The student loan reforms come at a vital time. While the economy is still undergoing its downturn, and the job market is less than amicable, recent graduates are finding it difficult to pay off their loans.

“Over the past decade, debt levels for graduating seniors with student loans have more than doubled, from $9,250 to over $20,000” said Paul Combe from “The Chronicle of Higher Education.”

Students and graduates can find out if they qualify for IBR by talking to their loan officers. Graduates can search the National Student Loan Data System database if they do not know who their lender is.

The website, http://www.ibrinfo.org/, has a calculator that can help borrowers determine whether or not they qualify for IBR If they do qualify, the calculator estimates how much they would pay each month.

Opponents of the program argue that for some students, IBR could mean that they pay more overtime. If graduates are paying less on their loans each month, then the amount of time it takes to pay off their loans is extended and eventually interest can be added to the loan. However, the government has said that they will pay the interest on Subsidized Stafford Loans, and other loans, for the first three years under the IBR plan.

After 25 years, any amount that is still owed after making qualified payments will be forgiven. For those who work in public service jobs, after ten years their loans could be forgiven, so students shouldn’t brush off these jobs so swiftly.

To find more information, calculate how IBR could work for you and your family, or find out if their job may be eligible for the Public Loan Service Forgiveness plan, students and graduates should visit the website, www.ibrinfo.org.

While the economy may be falling apart, at least borrowers won’t have to carry the burden in their checkbooks.