Income-based repayment and public service loan forgiveness

Need help better managing repayment? As a part of recent efforts to help students find relief from some of their federal student loan debt, the government implemented a relatively new repayment plan and loan forgiveness program for those who qualify. Some basic highlights of each program:

Income-Based Repayment Plan

  • 25-year repayment plan that takes into account your income and family size and not just your loan debt alone.
  • Payments will be no more than 15% of your discretionary income. Discretionary income is defined as the difference between a borrower's (and spouse's, if married) monthly adjusted gross income and 150% of the poverty line for borrower's family size. Don't worry, there is a calculator available to help you figure that out here.
  • Requires a partial financial hardship. Income verification and new application required each year.
  • After 25 years and 300 qualifying monthly payments, any remaining loan balance is forgiven. If your monthly payment is calculated to be $0, that would also be considered a qualifying monthly payment towards the 300. Keep in mind though that interest will continue to accrue.
  • IBR requires an application. If you have multiple loan holders and would like all of your loans to be on the IBR plan, you will need to complete a separate application for each. Contact your loan holder(s) for details.
  • IBR is not "one size fits all." Another repayment plan may actually be a better option for you. You can estimate your monthly payments under the different repayment plans here.

Public Service Loan Forgiveness

  • After 10 years of full-time service with a qualifying public service employer and 120 qualifying monthly payments made after October 1, 2007, any remaining loan balance is forgiven. The required 120 payments do not have to be consecutive, but must be separate, on-time, and full monthly payments. Paying more than the required monthly amount is generally not counted as additional qualifying payments.
  • For a list of types of employers that are considered Public Service, click here.
  • You may combine the Income-Based Repayment Plan with the Public Service Loan Forgiveness Program. For example, if your monthly payment based on IBR is $0, that would still qualify towards the 120 required payments for the Public Service Loan Forgiveness Program and any remaining balance after 10 instead of 25 years of full-time work with a qualifying public service employer, is forgiven. The other two repayment plans that you may combine the Public Service Loan Forgiveness Program with are the Standard 10-year Repayment Plan and the Income-Contingent Repayment Plan.
  • Only Direct Loans are eligible for Public Service Loan Forgiveness. If you have FFELP (Federal Family Educational Loan Program) loans only, you may consolidate them into a Direct Loan to qualify. Not sure if you have Direct and/or FFELP loans? Log on to to review your federal loan history.
  • The application to apply for Public Service Loan Forgiveness is currently under development as the first group of eligible borrowers would be in October 2017, but you may download a form now to begin tracking your progress toward meeting the requirements for Public Service Loan Forgiveness for a much smoother process when you apply for it at the end of the ten years.

For further details on the Income-Based Repayment Plan, Public Service Loan Forgiveness Program, and Loan Consolidation, log on to these websites:

Pacifica Viewbook

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