If you are struggling with student loan debt, you may be eligible to enroll in an income-based repayment (IBR) plan. This program can limit your monthly loan payments based on a certain percentage of your monthly income, which can temporarily be as low as 0% in some cases, and family size and income are the primary criteria for eligibility. In some cases, they can also include interest-subsidies and may offer forgiveness of your remaining balance after twenty to twenty-five years of timely payments.
When considering income-based repayment, it’s important to weigh the short- and long-term benefits and consequences to make the best decision for your finances. While IBR plans can provide short-term relief by lowering your monthly payments, this also means that more interest will accrue as it takes longer to pay off the principal balance and accrued interest. Also, those in IBR plans who have their remaining balances forgiven may need to pay income tax on these balances, according to current IRS regulations.
If you’re struggling with student loan debt, income-based repayment may be the right option for you to provide short-term relief, but it is a decision which must be made carefully and after thoroughly evaluating your options. Contact an experienced student loan attorney today for a free consultation.