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New-And-Improved IBR: Do You Qualify?

July 24, 2012 | Adam S. Minsky, Esq. Income-Based Repayment

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If you recall, the Obama administration launched a student loan initiative several months ago. One prong of this initiative was to accelerate the date on which “improved” Income-Based Repayment (IBR) was slated to take effect.

IBR, if you don’t know, is a fantastic repayment program for federal student loans where borrowers pay approximately 15% of their income towards their federal student loans, and whatever remains of the loan balance after 25 years is forgiven. The “new and improved” IBR (which is now being called “ICR-A”) would reduce monthly payments to 10% of discretionary of income and would reduce the repayment period to 20 years. This is a fantastic improvement. Of course, not everyone is eligible.

Last week, the U.S. Department of Education released new regulations governing who is eligible for this “new” IBR (aka, ICR-A). Here’s what the new regs say:

  • You must have had no outstanding federal student loans as of October 1, 2007, AND
  • You must have received a new federal student loan on or after October 1, 2011

This effectively cuts out many borrowers, unfortunately, which makes sense since the program is designed primarily for “new” borrowers. Moreover, the way the regulations are written, consolidation loans will not be sufficient to qualify someone for the new IBR program if the borrower did not already meet the above criteria prior to the consolidation. That said, this is a new, great option for students who will be graduating in the coming years and meet the eligibility criteria.

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Income-Based Repayment

About Adam S. Minsky, Esq.

Adam S. Minsky founded the first law office in Massachusetts devoted entirely to assisting student loan borrowers, and he is one of the only attorneys in the country practicing in this area of law. He provides counsel, legal assistance, and direct advocacy for borrowers on a variety of student loan-related matters. He regularly speaks to students, graduates, and advocates about the latest developments in higher education financing.

Books by Adam S. Minsky

The Student Loan Handbook for Law Students and Attorneys

The Student Loan Handbook for Law Students and Attorneys

Student Loan Debt 101

Student Loan Debt 101: The Definitive Guide to Understanding and Managing Your Student Loans

Student Loans for Parents and Cosigners

The Student Loan Guide for Parents and Cosigners

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asminsky@minsky-law.com
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Boston, MA 02110

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