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• Income-Based Repayment is a new payment plan introduced by the College Cost Reduction and Access Act (CCRAA).
• It provides assistance to borrowers with high student loan debt by making their loan payments affordable using debt, income and family size as a basis.
• It provides a long term plan for borrowers expected to have low paying positions, such as public service, for an extended period of time.
• Loan payments for qualifying borrowers are capped at 15% of his/her household discretionary income.
• After the borrower is initially declared eligible, the repayment period can be extended up to 25 years (300 payments).
• This payment plan option was made available to National Education borrowers beginning July 1, 2009.

Eligible Loan Types include:

• Stafford, SLS, Grad PLUS, and federal Consolidation loans.
• Perkins, HPSL, HEAL, and FISL loans are only eligible if included in a federal Consolidation loan.

Loans Types that are Not Eligible include:

• Parent PLUS loans or Consolidation loans that include Parent PLUS loans.
• Private (alternative) student loans, state loans, and other loans not guaranteed by the federal government.

There are three factors considered in determining eligibility for Income-Based Repayment: the total amount of student loan debt, income, and family size.

Income-Based Repayment caps the borrower's loan payment at 15% of his/her household discretionary income. There is no minimum monthly payment.

Discretionary income is calculated by taking the difference between the Adjusted Gross Income (AGI) and 150% of the federal poverty line that corresponds to the borrower's family size in the state he/she resides. Visit the U.S. Department of Heath & Human Services website for federal poverty guidelines.

Note: For a married borrower, the filing status determines the Adjusted Gross Income that is used. When the borrower files married/joint, both spouse's Adjusted Gross Incomes are considered in determining payment amount. When the borrower files married/separate, only the borrower's Adjusted Gross Income and debt are considered in determining payment amount.

After the initial calculation, the monthly payment amount is re-evaluated and adjusted annually based on changes in annual income and family size. The borrower must provide permission for the Internal Revenue Service to disclose his/her Adjusted Gross Income and other tax return information, and certify the family size on an annual basis.

The borrower can choose to participate in the Income-Based Repayment plan for up to 25 years (300 payments). After 25 years of qualifying payments, any remaining debt will be forgiven or discharged by the federal government. There may be tax implications. Under current tax law, the dollar amount of debt forgiven is considered taxable income during the year it is discharged.

Yes. Once a borrower initially qualifies for Income-Based Repayment, the repayment period can be extended up to 25 years. A lot of circumstances can change for the borrower in 25 years, especially related to income and family size. The borrower is not locked into this payment plan and may elect to switch to another payment plan or may simply pay off the loan in a less time without a penalty.

In certain situations, the borrower's monthly payment may be so low that it does not fully cover the interest accrued to the account. The federal government will then pay the unpaid interest on Subsidized Stafford loans for the first three years of the Income-Based Repayment plan. For all other loans, interest will accrue until it is paid or until the remaining balance is forgiven after the borrower completes 25 years of qualifying payments.

Yes. National Education offers other repayment plans that may be a better choice for you. These plans include:

• Level Payment Plan
• Graduated Payment Plan
• Income Sensitive Payment Plan
• Extended Payment Plan

If you are experiencing a situation or circumstances that are temporary, a deferment or forbearance may be your best option to manage your student loan. For more information visit the deferments and forbearance section of this website.

Yes. You can sign up for the Auto-Payment Plan to have your monthly payment for Income-Based Repayment automatically deducted each month from a savings or checking account. One difference is that federal regulations are used to determine your monthly payment amount and the due date. With Income-Based Repayment, you will not be able to select a payment date or change the monthly payment amount.