Income-Based Repayment

Income-based repayment is one of the options that you will have when you are dealing with student loans. Choosing income-based repayment can provide you with some definite advantages as a borrower. Here are the basics of income-based repayment.

Income-based Repayment

The basic idea behind income-based repayment is that your monthly payment is going to be affected by how much money you make from your job. When you first start out in your career, chances are that your income is going to be low. During this time, your monthly student loan payment will also be low if you are using the income-based repayment program. As your income increases over the years, your student loan payment is also going to increase. This program is available for those who have a federal Direct Student Loan or a federally guaranteed loan.


Typically, in order to determine your payment, the lender will use a certain percentage of your income. With this program, your monthly payment is never going to exceed 10 percent of your monthly income. If you have a very small income, the percentage is going to be even smaller. You will also have payment caps depending on how many people you have in your family and your annual income. 

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