The Department of Education's new Income-Based Repayment program (IBR) gives borrowers with limited incomes some relief from hefty student loan payments. As part of the College Cost Reduction and Access Act of 2007, IBR went into effect on July 1, 2009.
Under the rules of the IBR program, the amount paid every month is determined by how much borrowers make – with the maximum payment capped at 15 percent of their total income. If you earn less than $16,000, you won't have to make any monthly payments.
After 25 years of repayments, the balance of the loan is forgiven. Also, students who choose a career in public service – for example, a public health worker or federal employee – could see the remainder of their debt forgiven after only 10 years.
Private student loans do not qualify for the program. Nor do federal student loans taken out by parents. However, federal loans administered through private lenders are eligible.