L is for Loan Debt for Students – Is an Income Based Repayment Plan Right for You?
Many of today’s college graduates, eager to accept the challenges of their new careers are also facing a life-long financial challenge. The burden of considerable amounts of student debt may seem overwhelming.  If you are an individual with low income or high debt levels you may benefit from income-based repayment plans for your federal student loan.
The U.S. Department of Education offers four income-driven repayment plans that are designed to help make student debt more manageable by reducing the monthly payment, based on income and family size. These plans allow borrowers to pay only a certain percentage of their income rather than what they would owe under a standard 10-year repayment plan. Below are the four repayment plans available through the U.S. Department of Education. Most federal student loans are eligible for at least one income-driven repayment plan.

  • Revised Pay As You Earn Repayment Plan (REPAYE Plan)

  • Pay As You Earn Repayment Plan (PAYE Plan)

  • Income-Based Repayment Plan (IBR Plan)

  • Income-Contingent Repayment Plan (ICR Plan)

Keep in mind income-driven repayment plans will lower your monthly federal student loan payment. However, when you extend a repayment period and make lower payments, you will pay more interest over the life of the loan.
To decide if an income-driven repayment plan is right for you, go to U.S. Department of Education to learn about the pros and cons. Choose the plan that provides you with the most benefit based on you individual needs and circumstances. With any financial decision, it is always best to seek the advice of a trusted professional.
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