Income Based Repayment

Facts about the income based loan repayment plan

The income-based repayment plan offers you the opportunity to repay your student loan conveniently. With this plan, you do not have to worry about paying exorbitant rates. The repayment rates will be calculated according to your income. This is a move that has enabled many students access quality education without having to worry about refunding the money.

Applying for the income based repayment plan

For you to be granted the loan, first things first you have to your submit application. Additionally, you should meet all the requirements and be sure to provide the correct information. The application process entails:

• Filling out the application form online or through paper and submitting it.
• Provide income information. When providing the income information, you should be very honest. In addition, the income information should be backed by documents supporting what you have statement. Always bear in mind that the income information will be used to calculate what you will pay.

Types of loans under the income based repayment plan

There is a wide variety of loans on offer under this repayment plan. All you need to do is choose the ideal type of loan that suits your needs. Some of the loan types available include:

• Direct subsidized loan
• Direct unsubsidized loans
• Direct plus loans which are offered to professional students or graduates
• Federal Stafford loans from the FFEL program that are subsidized

Payments under the Income based repayment plan

Under this repayment plan, your monthly income and size of the family are the main determinants used to calculate what you will pay monthly. Therefore, ensure that you always update your loan servicer with information concerning your income and size of the family. However, if the payment amount which is based on your family and income exceeds what you should pay under the 10-year standard repayment plan, what you pay will be not be calculated depending on size of family or income levels. Instead the amount to be paid will be determined by the amount you owed when you joined the plan.

Effects of the income based repayment plan

This repayment plan helps to lower what you should pay for your federal student loan. As much as it lowers the amount to be paid, reduced payments or extended repayment periods attract more interest. In addition, if an amount is forgiven at the end of your repayment period, you should expect added income tax. Be sure to clear your loan repayment on time to avoid hefty penalties. In addition, ensure that you give the correct information regarding your income and family size. This will ensure that you stay clear of trouble with the authorities.


It is important to know what you are getting into before making a move. Ensure you make the right choices to avoid being heavily punished. Income based repayment; the facts should act as a guide for you to understand what is required of you and how to go about the loan repayment plan. If you were wondering how to go about the loan application process and what to expect when it comes to repayment, now you know better.

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