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                <p>The College Cost Reduction and Access Act (CCRAA) has been a  breakthrough for everyone looking to afford a higher education. There  are two distinct components related to loan repayment: The first,  discussed below, is <a href="http://us.rd.yahoo.com/dailynews/usnews/ts_usnews/storytext/repaystudentloansbasedonyourincome/40695070/SIG=13m846lnv/*http://www.usnews.com/education/blogs/student-loan-ranger/2010/12/15/manage-student-loans-via-income-based-repayment">Income-Based  Repayment</a> (IBR) that allows graduates to pay back their federal  loans on a sliding scale based on their income. The second, discussed in  last week's blog, is <a href="http://us.rd.yahoo.com/dailynews/usnews/ts_usnews/storytext/repaystudentloansbasedonyourincome/40695070/SIG=13qr011n1/*http://www.usnews.com/education/blogs/student-loan-ranger/2011/03/09/help-available-for-public-servants-drowning-in-debt">Public  Service Loan Forgiveness</a> (PSLF), which provides forgiveness on  federal educational loans for people who work in the public service  sector for 10 years.</p>
                <p>It is very important that  readers understand that these two provisions in CCRAA are not dependent  on one another. Someone can participate in IBR without also  participating in PSLF. In fact, IBR provides help to a much larger group  of people than PSLF, because IBR does not have a "qualifying  employment" element.</p>
                <p>Income-Based Repayment is available to everyone with federal student  loans--not just those who are working in the public service sector.  Working for a small private employer? Have a low-paying job at a fast  food restaurant? IBR might help you. IBR has the potential to help  hundreds of thousands of federal student loan borrowers make their  payments more manageable.</p>
                <p>[Learn how to <a href="http://us.rd.yahoo.com/dailynews/usnews/ts_usnews/storytext/repaystudentloansbasedonyourincome/40695070/SIG=132o64dgq/*http://www.usnews.com/articles/education/paying/2011/03/16/how-can-i-borrow-for-grad-school.html">borrow  for grad school</a>.]</p>
                <p>IBR payments are based  on income and family size. Typically, borrowers who earn less than they  owe in federal student loans will be eligible to choose IBR. For most  borrowers, payments will be less than 10 percent of their income.</p>
                <p>Here's an example for the average borrower: Say you  have $100,000 in federal student loans at an interest rate of 6.8  percent, with a repayment term of 15 years. Your monthly payment would  be $887. With IBR, if you are a family of one, earning an adjusted gross  income of $50,000, then your monthly payment amount could be reduced to  $422. If you are a family of three, your monthly payment could drop to  $282. Obviously, if your salary is lower, your payments will also be  lower.</p>
                <p>There is one catch: The lower payments  are based in part on a longer repayment period--25 years versus 15 years.  However, if you participate in IBR and are still carrying some debt  after 25 years, the remaining balance may be canceled if you meet  certain requirements.</p>
                <p>So with IBR, regardless  of your debt amount, you pay an amount that you can afford based on your  income. As your income grows, your payments grow. But you can afford  those payments because you are making more money. Throughout the entire  repayment period, most borrowers will pay 10 percent of their adjusted  gross income toward educational debts. That's reasonable because  payments are always pegged to income.</p>
                <p>And  remember, if you are working in the public service sector, you can take  advantage of both IBR and PSLF, so that you have lower monthly payments <i>and  </i>loan forgiveness after only 10 years. That's a great deal!</p>
                <p>[Know where to find <a href="http://us.rd.yahoo.com/dailynews/usnews/ts_usnews/storytext/repaystudentloansbasedonyourincome/40695070/SIG=13ep8v4k4/*http://www.usnews.com/articles/education/2011/03/16/know-where-to-find-graduate-school-loan-forgiveness.html">grad  school loan forgiveness</a>.]</p>
                <p>Keep in mind  that IBR is based on adjusted gross income, not wages. Adjusted gross  income includes wages plus certain other income (like interest income)  but minus specific deductions (like the student loan interest deduction  and IRA contribution deduction).</p>
                <p>In general,  to qualify for IBR, you must have high debt relative to your income, and  you must have federal loans--commercial and alternative loans are never  eligible.</p>
                <p>According to <a href="http://us.rd.yahoo.com/dailynews/usnews/ts_usnews/storytext/repaystudentloansbasedonyourincome/40695070/SIG=10p2cqp9d/*http://www.ibrinfo.org/">IBRinfo.org</a>, more than  232,000 federal student loan borrowers have already enrolled in  Income-Based Repayment. This is a great start, but so many more people  can benefit.</p>
                <p>IBR can be confusing, but there  are many resources available to help you navigate the process. You  should begin by using the U.S. Department of Education's <a href="http://us.rd.yahoo.com/dailynews/usnews/ts_usnews/storytext/repaystudentloansbasedonyourincome/40695070/SIG=125jhsegl/*http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp">IBR  calculator</a> to estimate whether you would likely qualify for the IBR  plan. The Equal Justice Works <a href="http://us.rd.yahoo.com/dailynews/usnews/ts_usnews/storytext/repaystudentloansbasedonyourincome/40695070/SIG=128f0nd0c/*http://www.equaljusticeworks.org/resources/student-debt-relief/default">resource  page</a> also provides a complete list of resources and tools that will  help you determine eligibility and next steps for qualifying.</p>
                <p><i>David Stern has worked for Equal Justice  Works since 1992 and has served as the executive director for the past  15 years. He graduated from <a href="http://us.rd.yahoo.com/dailynews/usnews/ts_usnews/storytext/repaystudentloansbasedonyourincome/40695070/SIG=13a3s3fee/*http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools/top-law-schools/law-center-03032">Georgetown  University Law Center</a> in 1985. In 2008, Stern was recognized by  Legal Times as one of the "Greatest Washington Lawyers in the Past 30  Years."</i></p>
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            </p></div></div><p><strong>Read more:</strong> <a class="rssreadon" rel="external" title="Repay Student Loans Based on Your Income   (U.S. News   World Report)" href="http://us.rd.yahoo.com/dailynews/rss/education/*http%3A//news.yahoo.com/s/usnews/20110316/ts_usnews/repaystudentloansbasedonyourincome" target="_blank">http://us.rd.yahoo.com/dailynews/rss/education/*http%3A//news.yahoo.com/s/usnews/20110316/ts_usnews/repaystudentloansbasedonyourincome</a></p>