Last weekend a reader asked about how to apply for one of the three income-based repayment options the Department of Education offers for repayment of federal student loans.
I’ve written multiple times on this blog about why I think it was a good idea financially for me to apply for an income-based repayment program, and I’ve been having a surprising number of chats recently with whether allowing borrowers to repay based on their income is good public policy or even morally OK, but I don’t think I’ve ever walked through the logistics of how to simply apply for it.
So I’ll do that today.
First, a note on vocabulary: I use “income-based repayment” as an English phrase meaning repayment based on income. “Income-Based Repayment” (Note the capital letters; henceforth IBR) is also one of three repayment plans administered by the Department of Education — as passed into law by Congress and signed by the President — that adjust minimum monthly payments proportional to a borrower’s income. The other two are Pay-As-You-Earn (PAYE) and Income-Contingent Repayment (ICR). I’ll try to keep this all as unambiguous as possible.
How to apply for an income-based repayment plan
- First, sign into your account at StudentLoans.gov
- Then, head to this page to apply for an income-based repayment plan. The same link works for IBR, ICR, and PAYE.
- Then, just fill out your information and walk through the different screens, including linking your application to your federal tax return. You’ll have to include additional paperwork if your current income is significantly different from what your tax returns show, but otherwise, it’s pretty simple
- There’s one step where it asks you to pick a repayment plan; decide the one you want and select that checkbox. You can also click a checkbox that will let your loan servicer pick the one with the lowest monthly payment.
- Finally, read the terms and conditions, review the information you entered, sign electronically, and click submit.
That’s about it. Don’t forget that you’ll need to resubmit this form every year, and you should resubmit it any time your income changes.