What is this?
Simple IBR is a simple (duh) calculator to help you find out if your student loans qualify for Income Based Repayment (IBR). While there are other, more detailed calculators out there, we wanted to make a fun and easy version to raise awareness of this program to those struggling with student loan debt.
What is Income Based Repayment (IBR)?
Income Based Repayment (IBR) is a student loan repayment plan that began in 2009. Those who qualify will be required to pay no more than 15% of their annual income toward their student loans. After 25 years, any remaining balance on the loans will be forgiven by the Federal Government (if you work in certain professions, you might only have to pay for 10 years)…it's that simple!
How do I qualify for the IBR?
If you have certain federal loans: Grad PLUS, Stafford, Perkins, and federal consolidation (though not Parent PLUS loans, sorry) and a high debt to income ratio, you qualify for IBR.
To be more specific: if your annual payment in a 10-year repayment plan is 15% greater than your income minus 150% of the poverty level for your household size, and you have federal loans, then you qualify. Whew! If you qualify, you will pay 15% of the difference of your income and 150% of the federal poverty rate for your family.
If you took out student loans to be a mathematician, you can figure it out yourself. For everyone else, we've made this calculator.
How do I apply for the IBR?
Where can I find out more about the latest changes to the IBR?
In October 2011, President Obama announced changes to the IBR that would reduce the amount of annual income borrowers must pay toward their loans from 15% to 10%, and decreased the time you have to pay from 25 years to 20. This will make a huge difference for many borrowers, though it seems that those who have already graduated will not be able to take advantage of the lower rates. Read President Obama's fact sheet about the changes. The New York Times has good coverage of the changes:
Who do I have to thank for all this?
Well, a bunch of people. First, the 110th Congress, who passed the College Cost Reduction and Access Act of 2007 of which IBR is a part (Section 203 to be exact). President Bush signed the bill into law on September 27, 2007. Future graduates should thank President Obama, who made the program more generous by executive order in October. So far, we need to thank two Presidents, 535 members of Congress, and all their staffers and aids.
Let's not forget to thank our fellow taxpayers. Remember how the remaining balance on your loan goes away after 25 years? Guess who's actually on the hook for that amount…your fellow taxpayers! 375 million or so of your friends, neighbors, family, people you haven't met and hundreds of millions more in the future. How about a group hug?
Who are you and why are you doing this?
Deelux is a Providence, RI-based husband-and-wife design team. Since we're self-employed (with substantial student loans) IBR has kept us out of our parents' basement.
With 5.8 million borrowers eligible for the program, we were surprised that only 450,000 are enrolled in IBR (a measly 7%)! We know from experience how mystifying the enrollment process can be, so we created Simple IBR.