Income-Based Repayment (IBR)

This is one of the income-driven repayment plans available to federal student loan borrowers. The plan allows for a reduced monthly payment on most federal student loans – making it a viable option for some borrowers to successfully manage, and afford, their student loan debt.

How Does IBR Work?

Income-Based Repayment* “caps” loan payments at 15% of your discretionary income, and the monthly payment is adjusted annually. Verification of your income and family size is required each year. The repayment term for IBR is up to 25 years. After 25 years, any remaining debt will be forgiven; however, the forgiven amount is taxable.

The repayment term for IBR is up to 25 years (20 years for new borrowers after 7/1/2014). After 25 years (or 20 years for new borrowers after 7/1/2014), any remaining loan balance will be forgiven; however, the forgiven amount is taxable.

Who Qualifies for IBR?

To qualify for the plan, borrowers must have a partial financial hardship (PFH). Most medical residents exhibit this hardship. Loan servicer(s) are the point of contact to determine your eligibility. Additional qualifying information is available on the Federal Student Aid website.

Which Loans Qualify for IBR?

  • Direct or FFELP Stafford and Consolidation Loans
  • PLUS Loans (not to parents)
  • Perkins and LDS Loans (only if part of a Consolidation Loan)

What are the Benefits of IBR?

  • Payments are tied to household income and family size.
  • The maximum payment is capped at the Standard 10-year repayment plan (determined when entering IBR).
  • Postponement of interest capitalization occurs until a PFH no longer exists. Capitalization could be postponed until residency is over.
  • A partial interest subsidy is available for the first three years on subsidized loans. There is no limit to how much interest can capitalize.
  • The IBR repayment plan is a qualifying plan for Public Service Loan Forgiveness (PSLF)

What is the Payment Amount?

To help determine your monthly payment under IBR, use the MedLoans® Organizer and Calculator.

How to Apply?

Submit the Income-Driven Repayment Plan Request form online at Studentaid.gov, or contact your servicer.

Example of a PGY-1 Resident in IBR (borrowed prior to 7/1/2014)*

Monthly Adjusted Gross Income(1) $4,830
(minus) 150% of Poverty Line(2) - $1,590
Discretionary income = $3,240
(multiplied by)(3) x .15%
Monthly IBR Payment (4) $480

(1) Based on AAMC estimate of 2020 first post-M.D. year median stipend
(2) Based on AAMC estimate of 2020 federal poverty guideline for a family size of one in the 48 contiguous states
(3) Based on 2015 federal regulations 
(4) Rounded to the nearest $10

*New borrowers on or after July 1, 2014, qualify for the “new” IBR plan, and payment is based on 10% of the borrower’s discretionary income. When evaluating repayment plans, the “new” IBR and the PAYE plan will have the same monthly payment; however, the PAYE plan may lead to lower total repayment cost.       


For those who borrowed before 7/1/2014, IBR is the only income-driven repayment plan available for both FFEL and Direct Loans.

Other Income-Driven Repayment Plans

Pay As You Earn (PAYE)
Revised Pay As You Earn (REPAYE)
Income-Contingent Repayment (ICR)

 

    

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MedLoans® Organizer and Calculator (MLOC)

The MedLoans® Organizer and Calculator was developed to assist medical students and residents with managing their education debt.

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This comprehensive financial guide helps professionals at all levels of the medical education continuum navigate the complexities of financing medical school by borrowing wisely and repaying student loan debt responsibly.

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