Student Loan Basics IBR, ICE & PAYE

So you’ve completed schooling, taking out loans along the way to cover costs – now what? Well, there are several options available to you (not to mention a six month grace period to figure out which repayment plan is best for you!), including repayment plans that are created based on your income.

Three of the main income-driven repayment plans are Income-Based Repayment (IBR) Plans, Income-Contingent Repayment (ICR) Plans, and Pay As You Earn Repayment (PAYE) Plans. As you would imagine from the name, IBR plans set your payment amount based on your discretionary income, typically 10 to 15 percent of this income per month. Because this income is based on a percentage, your payments will go up or down depending on how much money you are earning, and these types of repayment plans are usually approved for people that will have difficulty making the standard, flat payment fee.

Similarly, ICR plans are based on income; unlike IBR plans, these are based on your annual income as well as the size of your family. You can also expect your payment amount to change as your income changes.

Finally, PAYE plans are another form of income driven repayment plans. The percentage rate for these plans typically tops off at 10 percent of your discretionary income, but no more than what you would be paying on a standard ten year repayment plan. Unlike IBR and ICR plans, however, if you do not finish paying off your balance at the end of 20 years, the remaining balance will be forgiven. These and other repayment plans have regulations.

If you have questions about repaying your student loans, contact SM Law Group today!