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Since 1994, the federal government has had a program in place called Income Contingent Repayment or ICR. While only available under the Federal Direct Loan Program, the ICR can help a student keep his monthly payment at affordable levels. Under ICR, the student's monthly payment is recalculated annually on the basis of his adjusted gross income, family size and the amount of Direct Loans outstanding. The student will pay the lesser of two options.
The first is the amount the student would ordinarily pay if the payments were amortized over twelve years multiplied by a percentage factor that varies with the student's annual income. The second is simply twenty percent of the student's monthly discretionary income. Again, the ICR program allows the student to pay whichever of the two is smaller. While the amounts may change from year to year based on increasing or decreasing income, there is an ultimate cap on how fast they can grow.
Repaying student loans is always a challenge for any former student selling his services in the labor market. Since federal student loans cannot be discharged through bankruptcy, the student is stuck with them for the rest of his life until he pays them back. A program like ICR can help keep payments down, but at the cost of incentivizing him to remain at a low income level. The higher his monthly income, the higher his payments rise to match it.
Further, Income Contingent Repayment now has to compete with another federal program signed into law in 2007: Income-Based Repayment or IBR. IBR works on a similar principle to ICR but they are calculated differently. IBR is available to more students, not just those with Direct Loans. Another huge advantage is that IBR may give the student lower payments than ICR.
The ICR program is a federal route to lower monthly payments, but it does not solve the problem of being shackled with debt for life. ICR is a step in the right direction. A better program would evaluate students' situations on a case-by-case basis and fit the options to the student instead of the reverse.
What else can I help you with?
Could you inform me about income contingent repayment?
Income contingent repayment is to make repaying your student loans easier, especially those who are going into jobs with low paying salaries, such as public service careers. This website might help you: http://www.finaid.org/loans/icr.phtml
Where can I find more about the income contingent repayment option for student loans?
Income Contingent Repayment, abbreviated ICR, is used if a person needs to pay back their student loans but have a low income. Any direct subsidized or unsubsidized loans are eligible, as well as direct plus loans or direct consolidation loans. Loans that are not eligible are federal family education loan program loans (FFEL) and direct plus loans made to parents. If you choose the income contingent repayment option, you would make monthly payments for 25 years based on your family size, income, and amount of money owed for your direct loans.
What is income contingent repayment?
I believe it is the amount you must repay to the company or person you took out the loan from when you were a student. This may stretch for weeks months or even years.
You are a single mother and make barely over minimum wage how should you go about repaying your student loan?
If it's federal, consolidate with Direct Loans and go on income contingent repayment.
Is income contingent repayment plan is available for direct plus graduate or professional borrowers?
As of July 1, 2009, graduate and professional student Direct PLUS Loan borrowers are eligible to use the ICR plan. Parent Direct PLUS Loan borrowers are not eligible for the ICR repayment plan.
Where can one find a direct loans payment?
Direct loans payment can be found at the relevant sites of the federal government in co-operation with your employer. There are several repayment plans to choose from: standard, extended, graduated, and income contingent.
What are the options available for repayment of student loans?
The options available for repayment of student loans include standard repayment, income-driven repayment plans, extended repayment, graduated repayment, and loan forgiveness programs.
Can a William D Ford Income Contingent Repayment plan be discharged?
If your situation involving your student loan passes all prongs of the Brunner test, then it can be discharged. But, with the Ford Payment Plan, the income contingent plan, your payments are set based on your income according to your tax returns. One of the prongs of the Brunner test, is that the person has made a "good faith and honest effort to pay". Therefore, it is very difficult to pass that prong unless you have continued to make your payments according to your arranged Ford plan.
Full form of ibr?
Income based repayment
Federal Student Loan Payment Based on Income?
Borrowers who enter the repayment period on their student loans, but have trouble affording their payments have an option. The federal loan service allows borrowers to make payments on their student loans based on their income. Borrowers must submit records of their income to qualify for income-contingent payments. The lender will evaluate the borrowers' income and set their payment amount accordingly. Borrowers still accrue interest during the period of time that they are making income-contingent payments. However, borrowers may still save money by making these lower payments if they do so in a timely manner, thereby avoiding earning late fees or defaulting on payments.
How does income-based repayment work for student loans when married couples file their taxes separately?
When married couples file taxes separately, each spouse's income is considered individually for income-based repayment of student loans. This means that only the borrower's income is used to calculate the monthly loan payment, potentially resulting in a lower payment amount compared to filing taxes jointly.
What are the options available for Naviant student loan repayment?
The options available for Naviant student loan repayment include standard repayment, income-driven repayment plans, deferment, forbearance, and loan forgiveness programs.
