Income-Based Repayment (IBR) is designed to reduce monthly payments to help borrowers make student loan debt manageable. To qualify for IBR, borrowers must demonstrate financial hardship. We recognize financial hardship when the monthly amount required to pay RISLA's non-federal loans under a standard repayment plan is higher than the monthly amount under IBR. IBR payment amounts may increase or decrease each year based on the income, family size, and location of the borrower and co-borrower. Once initially qualified for IBR, RISLA non-federal loans of the qualified borrowers are automatically extended to have up to a twenty five year repayment term. That repayment term begins from the date of the borrower(s) initial repayment date and excludes any periods of deferment or forbearance other than IBR. Similar to the federal IBR program, if a RISLA IBR borrower(s) no longer qualifies for reduced payment, their monthly payment will never exceed the standard repayment amount the borrower(s) paid before becoming eligible for IBR.
All non-federal RISLA loans.
Under this plan, monthly payments are calculated:
- based on the income and family size of the borrower and co-borrower;
- adjusted each year, based on changes to annual income and family size;
- never more than the standard repayment amount at the time of election of IBR; and
- the repayment term is never more than 25 years after the beginning of the repayment term under the note.
Advantages of IBR
Pay based on what you earn
Under IBR, monthly payments will not exceed 15 percent of the discretionary income of the borrower and co-borrower and will never be more than the amount required to pay under the Standard Repayment Plan, and may be less than under other repayment plans.
Limitation on the capitalization of interest
During any IBR payment period, interest does continue to accrue. If the IBR payments are not enough to pay the current accruing interest, the interest will not be capitalized (added to the principal of the loan) until the end of the last qualified IBR repayment period.
If the loan balance is not paid in full at final maturity any remaining balance will be forgiven after 25 years of qualifying repayment. Periods of forbearance and deferment other than IBR payments are not qualifying periods of repayment.
Retain eligibility for RISLA's Loan Forgiveness Programs
Enrolling in an IBR plan will not disqualify a borrower from RISLA's nursing, nurse educators, Internships, and other loan forgiveness programs.
Disadvantages of IBR
The borrower(s) may pay more interest
A reduced monthly payment generally means the repayment period will be extended. As in the federal IBR program the borrower(s) will likely pay more total interest over the life of the loan compared to a 10 or 15 year repayment plan.
The Borrower and Co Borrower must submit annual documentation
The borrower and coborrower will be required to submit updated documentation to RISLA each year. If documentation is not received or not adequate to determine eligibility for IBR, the monthly payment amount will be changed to the amount required to pay under the Standard Repayment Plan of the loan prior to enrolling in IBR. This amount will be higher than the prior IBR payment that was based on the borrower’s and co-borrowers' income. In addition, if the borrower(s) do not provide the required income documentation, the IBR period will end and unpaid interest will be capitalized (added to the loan principal). Refer to the IBR application to see a list of required documentation.
You may have to pay taxes on any loan amount that is forgiven after 25 years
Consult your tax advisor on whether loan forgiveness is taxable.
How is the monthly payment amount calculated during eligible IBR periods?
Under RISLA’s Income Base Repayment Plan (IBR), the amount required to be repaid each month is based on the Adjusted Gross Income (AGI) and family size of both the primary borrower and co-borrower. If either borrower is married and files a joint federal tax return with their spouse, the AGI includes both the borrower’s income and their spouse’s income. The annual IBR repayment amount is 15 percent of the difference between the primary borrower’s AGI and 150 percent of the Department of Health and Human Services (HHS) Poverty Guideline for the family size and state. In addition, 15 percent of the difference between the co-borrower’s AGI and 150 percent of the HHS Poverty Guideline for the co borrower family size and state. The primary borrower and the co-borrower IBR repayment amounts are added together to determine the total IBR annual payments. This amount is then divided by 12 to get the monthly IBR payment amount. Income-based repayment is based on the adjusted gross income during the prior tax year.
Certain borrowers may have multiple co borrowers on their loans. Under those circumstances, RISLA will prorate the borrowers’ income based on the non federal RISLA loan balances between the individual RISLA non-federal loans incurred by the borrower.
Some co-borrowers may have cosigned on two or more eligible non federal RISLA loans. Under those circumstances RISLA will prorate the co-borrower's income based on the loan balances between the non federal RISLA loans incurred by other primary borrowers. The minimum monthly payment under the IBR program is $10 per month.
Sample Monthly Payment Amounts based on Income and Family Sizes
The following chart was constructed using the Poverty Guidelines for the 48 contiguous states and the District of Columbia that were in effect as of January 18, 2018.
|Size of Family|
|Family Adjusted Gross Income||1||2||3||4||5||6||7|