Today the federal government began a new program which may offer some students help with their debt problems.
The Income-Based Repayment (IBR) program reassesses monthly student loan payments based upon a person’s income and family size. Both existing and new student loans qualify for the program.
U.S. Secretary of Education Arne Duncan said the government is aware of the fact that many students are concerned with being able to reduce their loan debt, especially in today’s difficult economy.
"This new plan addresses the issue head on by giving them the option of a monthly payment tied to their income," Duncan said.
A single person whose yearly income is $40,000 and who has no dependents could have their monthly loan payment set at no more than $297.
Payments through the IBR program are calculated every year. Furthermore, because debt payments are reduced, those who take part in the program may end up paying more in interest.
Public-sector employees may get additional help solving their debt problems by using the program. Teachers and those who work for the government or nonprofit agencies may be eligible to have their remaining debt canceled after 10 years.