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Kind of Shocked there isn't more emphasis here about the Income Based Repayment Plan!

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  • Kind of Shocked there isn't more emphasis here about the Income Based Repayment Plan!

    I haven't been here much since my Chapter 7 discharge 6 years ago. So, I'm browsing around this site, and while I am happy to see mention of the IBR plan, it really has been limited. In the sticky thread above, people seemed to be suggesting that it was only for people in public service. It's a great option for anyone with non-private student loans!

    The income based repayment plan is NOT just for people in public service. It's for anyone with a partial financial hardship, which is defined as anyone whose student loan payments are higher than what they would be required to pay under the IBR plan. I think MOST of you would qualify for it.

    The difference is that if you don't work in public service, you'll have to pay on the IBR plan for 25 years to get your loans forgiven. If you do, you'll only have to pay for 10. And ZERO DOLLAR payments count toward your total.

    I haven't made enough posts to include a link here, but simply googling "income based repayment" will return the government website with more information.

  • #2
    You speak the truth, fellow Georgian! I got my IBR approved in March or April, with a year of zero payments (and I don't work in public service). I will have to provide them with new information every year to renew. I hope it's not harder than that now that I have been assigned from the Dept of Education to a new private servicer.

    There used to be a lot of "boxes to check" in asking for a temporary forbearance, such as "sick/injured/disabled," "taking care of disabled child/spouse," "just had a baby/on maternity leave," or even just a temporary drop in income or increase in expenses. Many years ago, I called my loan servicer in a panic because my roommate had just moved out and left me temporarily with the entire apartment bill! They gave me a temporary forbearance so that I could just pay a little bit for a few months.

    I don't know if that exists anymore. It seemed a good way to keep people like me out of default but I did not see those options when I applied for the IBR.

    I should point out that I paid off most of my student loans back before my personal financial disaster, and I don't foresee a problem paying them in the future. I can count on one hand the friends of mine that had to take out loans for college or graduate school - either because they came from some money, or education was less expensive, or some combination thereof.
    Filed non-consumer no asset Chapter 7 on 7-12-10 after 4 foreclosures, 7 lawsuits including 2 deficiencies, 2 wage garnishments, a bank garnishment and a partridge in a pear tree. 341 held on 8-11-10. Discharge 11-4-10.

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    • #3
      Your thread is very good for only two posts in three years. It needs to be bumped up.

      I just hated college. I don't think I spend two days in Jr. College and laid out. I ran away from home and put myself into a position of sink or swim. I grew up. I got a career in what I loved the most. Fixing things. I can honestly say, I didn't work a day of my career as I enjoyed going to work. I got a true education as I needed to become serious in school and was trained free equivalent to a mechanical engineer. Then electronics, computer logic, and Nirvana for me. After 35 years I was laid off as the whole center was outsourced. A bummer? No, I learned other things like teaching. I hated school and realized I was teaching in school.

      Hey, life goes by fast, but, what a ride. Life is what you make of it. I would never borrow for a college. The degree will not get you where it did years ago. Mrs. was passed over as a 10 year part timer with a Masters degree, for a 30 year old green guy. Tell me about age discrimination. But, we are doing fine, much better than when we had "stuff". We now have no bills. Life is good. 'Hub
      If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

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      • #4
        Yes IBR is a great great thing. However, these private student loans have NO options like that. It's either pay whatever amount at whatever interest rate every month or default. I'm thinking perhaps the IBR has been understated because people are aware that govt. backed loans are eligible, thus making these types of loans reasonable to pay.

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        • #5
          How onerous are the requirements to get set up in this plan? I was reading an article that said that there were such onerous requirements.

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          • #6
            IBR and Income Contingent Repayment (ICR) plans are both good options for those who can't afford to pay back their student loans under the standard repayment plan.

            And no, there are no onerous requirements to set up these plans. It's rather easy, in fact. Just fill out the forms and send them back in. If you qualify, they will put you on one of the plans.
            The world's simplest C & D Letter:
            "I demand that you cease and desist from any communication with me."
            Notice that I never actually mention or acknowledge the debt in my letter.

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            • #7
              Besides the form to fill out, you also have to send in your most recent tax return (unless this has changed recently), but if you weren't required to file taxes, they have an "alternative documentation of income" form to fill out.

              Also, unless this has changed since I applied, you'll also need to provide proof of your (and your spouse's, if applicable) income. The form should list the types of income documentation that are accepted, but some examples are pay stubs and bank statements. If you don't have any of those items to provide for proof of income, you can provide a signed statement regarding your income. Since I'm self-employed, I just typed up (and signed) a statement saying that I was self-employed, and I think I noted my average monthly income or my most recent income for the past year.

              As someone else mentioned above, they will want updated information yearly. On the form, it says that you agree to provide them with annual documentation of your income, so that they can determine if your monthly payment should change. I thought they'd send you something to let you know it was time to send in the documentation again, but since I wasn't sure, I just did a search, and the site IBRinfo (http://www.ibrinfo.org) says,

              If you're already in IBR, make sure your lender has updated income information for you before the annual anniversary of your enrollment in the program, so they can determine your payment for the next year. Missing your deadline can result in a much higher payment that doesn't take your income into account. Currently, lenders aren't required to notify borrowers about this crucial deadline. Borrowers have reported that it can take up to three months to process the paperwork, and processing delays can also trigger a high payment.
              I haven't read much of that IBRinfo site, but it looks like it will answer a lot of your questions about the IBR plan.

              As for my IBR experience, I think it's been over a year since I sent in the form to be put in the plan, but they ended up putting me in a different plan (not income based), yet they lowered my payments. I remember my online account said at first that I was in the IBR plan and what my new monthly payment was. But then a couple of weeks later or so, my payment due was higher than that (but lower than it had been previously, before I applied for the IBR plan), and the name of the plan was different...I think it was one of the "grandfathered" repayment plans that I had previously been in - they put me back on that plan, but my payment was a lot lower than it had been before I sent in my IBR application.

              I remember when making the request to change to the income-based plan (on the website, before sending in the form), it said the plan I was in at the time was no longer available and I could never go back to it if I switched plans, but they ended up putting me back on it, yet lowered my monthly payment (and supposedly the monthly payment is fixed and it won't go up). If I thought I had more than 25 years of payments left, I'd call and figure out what happened so I could get on the IBR plan (for the 25-year forgiveness), but I don't owe that much more, so I don't think I'd still owe anything on it in 25 years.

              I think my situation was odd and most people will actually be put in the IBR plan if they apply and are eligible. Sending in the documentation might sound like a pain, but it's worth it to have lower payments (and to have your loans forgiven after 25 years). Plus, the IBR application/documentation process will probably seem like a piece of cake compared to the BK process.
              Last edited by SadPanda; 09-12-2012, 02:45 AM.

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              • #8
                I wish I could do IBR but I make too much money. I have over 100k in student loans and just because I make over their limit I can get no assistance. I could do the Income contingent plan, but it would actually be more per month than what I have now ... lol. I wish they took more factors into consideration other than income and your student loan debt. Like cost of living etc...
                BK Ch 7 Discharged 09/2009 | Anything I say can and should be used as friendly advice and sharing of experiences with an unbiased viewpoint.
                Scores: EQ 745 EX 704 TU 710 as of 08/15/2012

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                • #9
                  Originally posted by Amy26 View Post
                  I wish I could do IBR but I make too much money. I have over 100k in student loans and just because I make over their limit I can get no assistance. I could do the Income contingent plan, but it would actually be more per month than what I have now ... lol. I wish they took more factors into consideration other than income and your student loan debt. Like cost of living etc...
                  I don't understand. I thought everyone is eligible. Perhaps the situation is that your income is high enough such that the 15% (or is it 10% now?) would be higher than your current payments, so it would not be of any use to you. If that's the case, then you must be doing pretty well.

                  Please explain.

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                  • #10
                    Here is some information from the Equal Justice Works site:

                    Income-Based Repayment can substantially reduce the amount you must pay each month on your federal student loans. You qualify for IBR if you have a "Partial Financial Hardship" with regard to your eligible federal student loans.

                    A Partial Financial Hardship exists when the annual amount due on all of a borrower's eligible loans exceeds 15 percent of "discretionary income." Typically, if you earn less than you owe in eligible federal student loans, you may choose IBR. For many borrowers in IBR, your monthly payment amount will be less than 10 percent of your income.

                    Your discretionary income is calculated using your adjusted gross income from your latest income tax filings and also considers your family size.

                    Public service employees with a relatively high student debt-to-income ratio will generally qualify and demonstrate a Partial Financial Hardship. For example, a single person with an adjusted gross income of $48,000 who owes about $35,000 in federal student loans will be able to choose Income-Based Repayment.
                    There's also an estimated eligibility chart of annual gross income to debt on that page: http://www.equaljusticeworks.org/ed-...ho-is-eligible

                    Here's some related information from the IBRinfo site I mentioned in an earlier post:

                    What happens when my income increases while I am in IBR?

                    Because your IBR payment amount is a percentage of your income, your payments will rise as your income increases. Your lender should reassess this annually, and you should check with them to see if you need to fill out additional paperwork.

                    If your income increases to the point where you no longer have a partial financial hardship, any unpaid interest that has accumulated would be capitalized (added to your total loan balance). You can still stay in IBR, and your payments will be capped at the 10-year standard monthly payment on the balance you owed when you first entered repayment on the loan. You will never be "kicked out" of IBR based on your income.

                    Comment


                    • #11
                      Also, on the bottom of that eligibility chart, it says, "Interest rate = 6.8%; 2009 Poverty Guidelines; Household size of 1 residing in 48 contiguous states." So some of the information may be different now, since that was based on 2009 guidelines, and it may be different based on your household size.

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