What is student loan forgiveness under IBR? What other plans have been paused
This is the only current plan not subject to any legal challenge or court injunction.
How IBR works?
Student loan forgiveness under IBR works with a formula that is tied to a borrower's income and family size. This is used to determine how much the borrower needs to pay back monthly.
Then, payments are recalculated every 12 months. Borrowers who do not pay back their entire student loans by the end of their repayment term – which is 25 years, for borrowings prior to July 1, 2014, and 20 years for anything borrowed after that – would then be entitled to student loan forgiveness.
What other plans have been paused?
Some of the other plans are paused due to court rulings. These include –
Pay As You Earn (PAYE) Plan - As per the US Federal Student Aid site, 'the PAYE Plan is an income-driven repayment plan with monthly payments that are generally equal to 10% of your discretionary income, divided by 12, but never more than the 10-year Standard Repayment amount.'
Saving on a Valuable Education (SAVE) Plan - This plan replaced the Revised Pay As You Earn (REPAYE) Plan. Borrowers on the latter plan were automatically switched to the SAVE plan. The Department of Education describes this to be like any other income-driven repayment plans (IDR). It calculates monthly payment amount based on your income and family size.
There are some advantages of opting for the SAVE plan, as highlighted by the Education dept. These include: keeping the balance in check while making required repayments, having more of the income protected for basic needs, seeing the remaining balance forgiven after as few as 10 years of payments, and having payments for undergraduate loans cut in half from July 2024.
Income-Contingent Repayment (ICR) Plan - The US Federal Student Aid site defines ICR as 'a repayment plan with monthly payments that are the lesser of (1) what you would pay on a repayment plan with a fixed monthly payment over 12 years, adjusted based on your income or (2) 20% of your discretionary income, divided by 12.'
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