Am I Eligible For An IDR Plan For My Federal Student Loans?

However, I can explain the steps that borrowers may go through to determine their eligibility for Income-Driven Repayment (IDR) plans:

Determine if you have federal student loans: Only federal student loans are eligible for IDR plans. Private student loans are not.

Determine which IDR plan you may be eligible for: There are four main IDR plans: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR). Each plan has its own eligibility requirements and repayment terms.

Check your income and family size: IDR plans require borrowers to demonstrate financial hardship by showing that their income is not sufficient to cover their monthly loan payments. The specific income and family size requirements vary by plan.

Calculate your monthly payment: Each IDR plan calculates monthly payments differently, but they are generally based on a percentage of your discretionary income.

Determine if you are eligible for loan forgiveness: Depending on the IDR plan, borrowers may be eligible for loan forgiveness after 20 or 25 years of payments. However, loan forgiveness may be considered taxable income.

Overall, IDR plans can provide relief for federal student loan borrowers who are struggling to make their monthly payments. However, it is important to carefully consider the eligibility requirements and repayment terms before enrolling in an IDR plan.

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Robert J. Pyle, CFP®, CFA, AEP® founded Diversified Asset Management, Inc., in 1996 to provide personalized, comprehensive wealth management services to successful individuals, families, single women, and business owners. His specialty is addressing the complex financial needs of self-employed professionals, corporate executives, and small-business owners. Our disclosure can be found here. The views, opinion, information, and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc. Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting, or tax advice.