What is the difference between IDR and IBR?

Income-Based Repayment is a type of income-driven repayment (IDR) plan that can lower your monthly student loan payments. If your payments are unaffordable due to a high student loan balance compared to your current income, an Income-Based Repayment (IBR) plan can provide much-needed relief.

What is a term based repayment plan?

Standard repayment plans, which spread equal payments out over the term of the loan, typically 10 years. Extended repayment plans, which generally give borrowers up to 25 years to pay back the loan. Income-based plans, which allow for monthly payments based on your income level.

What does income-driven mean?

An income-driven repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size. Pay As You Earn Repayment Plan (PAYE Plan) Income-Based Repayment Plan (IBR Plan)

Are income-driven repayment plans forgiven after 20 years?

The term “income-driven repayment” describes a collection of plans that calculate a borrower’s monthly student loan payment based on their income. Importantly, any remaining balance would be forgiven at the end of the plan’s repayment term, which is either 20 years or 25 years, depending on the specific program.

What’s the difference between income driven and Income Contingent Repayment?

Income-based Repayment and Income-Contingent Repayment are two income-driven plans for federal student loans. Both adjust your monthly payments based on your income, and both plans have annual requirements to recertify your income and family size .

What is discretionary income in income driven repayment?

Discretionary income is the difference between your annual income and 100 to 150 percent of the federal poverty guidelines, depending on your repayment plan, family size and location. Keep in mind that some income-driven repayment plans, like REPAYE, have what’s often referred to as a marriage penalty.

Which is better IBR or income driven repayment?

The second reason many borrowers prefer IBR is that it covers both Direct Loans and Federal Family Education Loans (FFEL). Other income-driven plans such as ICR require you to consolidate FFEL Loans, a step you don’t have to take to get on IBR.

How to apply for an income driven repayment plan?

The first step in applying for an income-driven repayment plan is contacting your loan servicer to find out what options may be available. Your choices will depend on the type of federal loan you have and when you borrowed the money. The next step is submitting an Income-Driven Repayment Plan Request.