Updated rules for Income-Based Repayment recently went into effect to make the program more fair for married borrowers and those who owe more than when they finished school. Last year, more than a thousand IBRinfo subscribers sent letters urging the Department of Education to fix these problems, and those efforts paid off.
The updated calculator to determine if you qualify is available here. It is definitely worth checking out as some people will be eligible for IBR who weren't before.
Here is a summary of the changes that are now in effect:
Married Borrowers: When married couples both have federal student loans, they will no longer face higher IBR payments than their unmarried peers. For married borrowers who file their taxes jointly, lenders will factor in the couple's total federal student loan debt, as well as their total income, to calculate payments. Originally, IBR did not recognize that joint income has to cover both spouses' federal loan payments, resulting in payment requirements up to twice what two equivalent single people would have to pay.
Baseline Debt: IBR eligibility will be based on either the balance when the loan first entered repayment or the current loan amount, whichever is greater. This will allow borrowers whose loan balances have increased (often due to accrued interest during periods of deferment or forbearance) to qualify based on what they actually owe. (Note: This change only affects IBR eligibility, not payment amounts - your IBR payment amount is based on your income.)
Married Borrowers: When married couples both have federal student loans, they will no longer face higher IBR payments than their unmarried peers. For married borrowers who file their taxes jointly, lenders will factor in the couple's total federal student loan debt, as well as their total income, to calculate payments. Originally, IBR did not recognize that joint income has to cover both spouses' federal loan payments, resulting in payment requirements up to twice what two equivalent single people would have to pay.
Baseline Debt: IBR eligibility will be based on either the balance when the loan first entered repayment or the current loan amount, whichever is greater. This will allow borrowers whose loan balances have increased (often due to accrued interest during periods of deferment or forbearance) to qualify based on what they actually owe. (Note: This change only affects IBR eligibility, not payment amounts - your IBR payment amount is based on your income.)
For additional questions, click HERE.
