Many of us are attracted to IBR because of the low more manageable monthly
payments. This is done by a special formula that is based off of your adjusted income level,
the federal poverty line and the number of family members you support. There’s also Student Loan Forgiveness, if you qualify, it’s possible that whatever unpaid balance you still have after 25yrs of steady payments gets forgiven by the department of education. This is usually reserved for those who have worked full-time in public service. Another aspect of IBR is Student Loan Interest Help, this option states that the government might pay the interest on your subsidized Stafford Loan for your first three years in the program, after that, the unpaid interest goes up.
There are other not so attractive aspects to IBR that aren’t usually stressed so much when thinking of making this decision. One being the Increased Interest Over the Life Of the Loan. Minimizing your loan payments mean that your interest will increase more rapidly than if you paid the given standard amount and took no breaks. Annual Paperwork is another factor to IBR, your must have your income verified each year to qualify for the program. Upward Adjustments is another having payments adjust upward each year to match rising income, so it’s possible that those who have a fluctuating income could get stuck with a higher payment if they happen to have a good year even if their income decreases shortly after. Private Loan Exemption, IBR only works for federal loans such as Perkins, Stafford and Grad Plus, Private loans have their own rules. Household Income, The family income determines your payments so if you have a minimum wage job but your spouse gets paid well beyond average, they will base it off of the highest income. You may be taxed, as of now the amount you’re forgiven for IBR counts as income that can be taxed in the 25th year. Signed and Sealed, If you stay in the program then your payments will never go above the standard 10yr payment amount; However, if you leave the program you may be penalized.
