Income-Based Repayment (IBR) Plan eligibility and application information:
The Income-Based Repayment (IBR) plan was proposed as part of the College Cost Reduction and Access Act of 2007 to be available on July 1, 2009. The purpose of this new program is to ensure that students who invest in a college education are also positioned to be able to repay their student loan debt (or are able to make their full student loans payments).
Income-Based Repayment is only available for federal student loans, such as the Stafford, Grad PLUS, and some consolidation loans. It is not available for parent PLUS loans, consolidation loans that included any parent PLUS loans, or private loans.
This repayment plan caps monthly payments at 15% of your monthly discretionary income. (Instructions for calculating your monthly discretionary income are below.) Under an IBR plan, your repayment term may be extended up to 25 years of qualifying payments and Economic Hardship Deferment. After 25 years, any remaining debt will be forgiven.
To determine if you may be eligible, please follow the steps below:
Step 1: Determine your maximum annual student loan payment amount on IBR-eligible loans based on your income. Take your Adjusted Gross Income (AGI) minus 150% of the poverty guideline based on your state and family size (using the table below) and then multiply by 15%.
150% of 2009 HHS Poverty Guidelines by Family Size
Number of People in Household
48 Contiguous U.S. States and D.C.
Alaska
Hawaii
1
$16,245
$20,295
$18,690
2
$21,855
$27,315
$25,140
3
$27,465
$34,335
$31,590
4
$33,075
$41,355
$38,040
5
$38,685
$48,375
$44,490
6
$44,295
$55,395
$50,940
7
$49,905
$62,415
$57,390
8
$55,515
$69,435
$63,840
For each additional person, add:
$5,610
$7,020
$6,450
Step 2: Calculate your current annual student loan payment obligation by multiplying your monthly payment amount at the time you first entered repayment for each IBR-eligible loan by 12. Then add all these amounts together. Note: This should be calculated based on a 10-year repayment term.
Step 3: Determine your eligibility. If your total payment amount (Step 2) exceeds your maximum obligation based on your current income (Step 1), you may qualify for Income-Based Repayment.
Examples:A borrower currently has an adjusted gross income of $32,000. He has a family size of 3 and lives within the 48 continuous states. His student loan payment amount as calculated in step 2 on his IBR-eligible loans equal $900 annually.($32,000 - $27,465) x 15% = $680.25Based on this information, he would demonstrate a partial financial hardship and would qualify for the Income-Based Repayment Plan.If the same borrower has an adjusted gross income of $40,000, he would not qualify for this repayment plan, as his total student loan payment would not exceed $1,880.25.($40,000 - $27,465) x 15% = $1,880.25
Examples:
A borrower currently has an adjusted gross income of $32,000. He has a family size of 3 and lives within the 48 continuous states. His student loan payment amount as calculated in step 2 on his IBR-eligible loans equal $900 annually.
($32,000 - $27,465) x 15% = $680.25Based on this information, he would demonstrate a partial financial hardship and would qualify for the Income-Based Repayment Plan.
($32,000 - $27,465) x 15% = $680.25
Based on this information, he would demonstrate a partial financial hardship and would qualify for the Income-Based Repayment Plan.
If the same borrower has an adjusted gross income of $40,000, he would not qualify for this repayment plan, as his total student loan payment would not exceed $1,880.25.
($40,000 - $27,465) x 15% = $1,880.25
To apply for Income-Based Repayment:
1. Download the request form for the Income-Based Repayment Plan by clicking here.
2. When applying for Income-Based Repayment, you must provide a signed copy of your full federal tax return (1040, 1040 A, or 1040 EZ forms). If your tax information is not available, you must provide your consent to the IRS to disclose your adjusted gross income (AGI) to Nelnet using the 4506t form.
If you did not file taxes within the last year, please complete the alternative document form along with supporting documentation with your Income-Based Repayment Plan form.
3. Complete page 1 of the IBR Plan form, including your family size and additional loan information.
4. Sign the form and return it to:
NelnetP.O. Box 82565 Lincoln, NE 68501-2565 Fax: 1.866.545.9196
NOTE: We are unable to process your request until the IRS provides us with proof of your adjusted gross monthly income or a copy of your federal tax return.
