federal student loan relief programs can help your student loan debt problems.
Your financial situation is different from someone else. The Federal student loan relief service that works for someone may not be the best choice for someone else. You should take the time to understand all the debt relief options available to you to find the best solution for your needs and goals.
Federal Student Loan Relief Guide Locator
What Is Federal Student Loan Relief?
Federal Student Loan Relief are a series of debt relief programs where your payment on a federal student loan can be adjusted to reflect your income and family size (your ability to pay) rather than the terms of the loan. Income Driven Repayment (IDR) is an acknowledgement by the federal government that for many, the salary you earn after earning your degree does not match the educational expenses you incurred in the process. An income driven repayment plan and can reduce your monthly student loan payments. If your payments are unaffordable due to a high student loan balance compared to your current income, an IDR plan can provide much-needed relief.
Four Federal Loan Relief IDR Plans
An Income-Driven Repayment plan sets your monthly federal student loan payment at an amount that is intended to be affordable based on your income and family size. The Department of Education offers IDR plans to borrowers who qualify, and they can lower your payments to as little as 10 percent of your discretionary income.
There are four IDR plans available but choosing one can be a little overwhelming and confusing. Switching to one of these IDR plans is usually right for you when: you can not afford your current student loan payments; you will qualify for Public Service Loan Forgiveness; you have high debt and a low income. Before deciding, you will want to be sure you understand IDR plans and how they can affect your finances and student debt.
IBR Plan | PAYE Plan
IDR Plans Lower Monthly Costs
The Standard Repayment Plan is the most popular plan for federal student and parent loans. It is a level payment plan, with up to 120 fixed monthly payments during a repayment term of up to 10 years. But many borrowers find that it is not always affordable due to high student loan balances or lower incomes relative to student debt.
An IDR plan can provide your the debt relief that you need. Instead of setting monthly payments according to your student loan balance, the amount due is relative to your income. It is intended to make your payments affordable while taking income and family size into account.
There are four IDR plans that set your monthly student loan payment at a percentage that ranges from 10-20% of your discretionary income. Your discretionary income is calculated by finding the difference between your adjusted gross income and 150% of the annual poverty line for a family of your size and in your state. This means your IDR plan student loan payments are individualized to match your specific income, costs of living, and family size.
REPAYE Plan | ICR Plan
Should You Switch To IDR Plan?
Federal IDR Plan Summary
best if you
|Income Based Repayment||15%||Don’t qualify for PAYE.
Have FFELP student loans.
|Pay As You Earn||10%||Are married with two incomes.
Have graduate loans.
Have low earning potential
|Revised Pay As You Earn||10%||Aren’t married.
Don’t have graduate loans.
Have high earning potential.
|Income Contingent Repayment||20%||Have parent PLUS loans.
Want to reduce payments slightly.
How To Apply For Loan Relief
You can apply for income-driven repayment at studentloans.gov or by sending your student loan servicer a paper request form. You can change your student loan repayment plan at any time.
To complete the application, you will need to provide information about your family size and your most recent federal income tax return or transcript. If you didn’t file taxes, you will need to submit alternate proof of any taxable income earned during the past 90 days.
Your servicer can put your loans in forbearance while processing your application. You are not required to make payments during forbearance. However your loan interest will accrue adding to the amount you owe.