Income Based Repayment Vs Ibr For New Borrowers

Monthly payment of 395 per month.

Income based repayment vs ibr for new borrowers. Monthly payment of 195 per month. The ibr for new borrowers plan expanded on the original income based repayment ibr plan developed by president george w. If you have student loans from before july 1 2014 paye may give your budget more breathing room compared with ibr. Signed into law by president barack obama in 2015 ibr for new borrowers offers additional benefits if you were unable to meet the original ibr deadline including lower student loan interest and earlier student loan forgiveness.

Income contingent repayment icr 20 of discretionary income. It limits payments to either 10 or 15 of your discretionary income depending on the type of loan whereas icr caps payments at 20. Ibr typically lowers your monthly payment more than icr does. For borrowers who were issued their first loans before july 1 2014 ibr limits payments to 15 of discretionary income.

What s unique about income based repayment. These borrowers will also receive forgiveness after 20 years of repayment. The minimum payment is 10 00 under ibr paye and repaye unless the calculated payment is less than 5 00 in which case the payment is zero. The income based repayment plan ibr vs.

For new borrowers on or after july 1 2014 ibr caps payments at 10 of your discretionary income. Your discretionary income is the difference between 150 of the poverty guideline and your agi so subtract 39 300 from your agi to get 10 700. Income based repayment ibr 15 of discretionary income. President obama s new pay as you earn paye repayment option is yummy.

Income based repayment plan ibr income based repayment plans also called income driven repayment plans are recommended for federal loan borrowers whose monthly loans add up to more than 10 of. If you re a new borrower on or after july 1 2014. However under ibr payments for your older loans are set at 15 of your income. The minimum payment is 5 00 under icr unless the calculated payment is zero in which case the payment is zero.

Except um lots of us don t qualify for paye and will have to settle for its somewhat less attractive but still good looking older sibling income based repayment ibr. That s because paye caps your student loan bill at 10 of your income. Monthly payments are almost always going to be lower under ibr since it sets payments at 10 of discretionary income whereas icr sets the at 20. The income contingent repayment plan icr in most cases ibr is a better option than icr for the reasons i outlined above plus.