Income-Based Repayment program offers relief for struggling student loan borrowers

July 1, 4:06 PMOrlando Working Moms ExaminerEileen Caines

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Higher education is almost a necessity in today’s job market. A high school diploma may have opened doors to myriad options a few decades ago but hardly holds the same weight today. A graduate degree can help propel your resume to the top of the pile, but it’s costly with rising education costs. The Income-Based Repayment program, part of 2007’s College Cost Reduction and Access Act, goes into effect today to provide relief for millions of Americans who are having difficulty repaying their student loans.

The Income-Based Repayment program will greatly benefit borrowers whose current payments are greater than 15% of their discretionary income. Under this program, current borrowers can renegotiate their payments to a lower amount. It only affects federal loans, though, so loans through private sources are not eligible for renegotiation under this program, and PLUS loans (loans made to parents) are also ineligible. Federal consolidation loans, however, are eligible.

For borrowers working in the public service sector, such as teaching, nursing, and non-profit work, loans are forgiven under this program in 10 years instead of 25 for those working in private industries. Additionally, loan forgiveness (after 10 or 25 years, depending on the type of work you do) will no longer be taxable and subject to IRS regulations.

The Income-Based Repayment program is only one of the benefits going into effect today. Representative George Miller (D-California) explains other changes to federal student loans here.

With tuition at Florida colleges on the rise (UCF’s current undergraduate tuition is roughly $6,000 per year, depending on the number of credits you take each year), benefits like these are welcome news to parents of high school students, some of whom are still paying off their own student loans, and for parents trying to save for their own children’s college tuition.

For more info: Visit the IBR website if you think you qualify for the Income-Based Repayment program. This handy calculator will also help you determine how much you can expect to pay each month towards your student loans.