Income-Based Repayment Plans | McCarthy Law
June 14, 2021

Income-Based Repayment Plans

Student loan debt is a means to an end for many people to pay for the increasing costs associated with a college education. However, there will come a time when you have to start making repayments on those loans, at which point you’ll likely select or be assigned a repayment plan. There are many plans to choose from, including a standard repayment plan, extended repayment plan, income-contingent repayment plan, income-sensitive repayment plan, and a pay-as-you-earn repayment plan.

One option is an income-based repayment (IBR). This is a federal student loan repayment program that adjusts the amount you owe each month based on your income and family size. If your payments are unaffordable due to a high student loan balance compared to your current income, an IBR plan can provide much-needed relief by lowering your monthly payments.

However, IBR only applies to those with federal student loans. Those in Arizona with private loans looking for the most effective student loan strategy should look no further for debt relief than the experienced debt settlement lawyers at McCarthy Law.

Understanding Income-Based Repayment Plans for Those with Federal Student Loans

An income-driven repayment plan sets your monthly student loan payment at an amount that’s designed to be affordable based on your income and family size. Any changes to either of these factors will ultimately result in an adjusted monthly payment. If your federal student loan payments are especially high compared to your income, you may consider repaying your loans under an income-driven repayment plan. However, only certain individuals are eligible.

The first eligibility requirement to note is that you must have a federal student loan, not a private loan, to qualify. If you have a private student loan, you have other convenient options available to you with the help of the legal professionals at McCarthy Law. Additional eligibility requirements include the following:

  • Only Stafford, Grad PLUS, and Direct Consolidated Loans made under either the Direct Loan or Federal Family Education Loan (FFEL) Program are eligible
  • Loans in default, uninsured private loans, Parent PLUS loans, Perkins loans, and consolidation loans that repaid Parent PLUS loans are not eligible.
  • You must show a “partial financial hardship”

Each year, borrowers repaying under IBR must resubmit documentation of income and family size to their lender. Payments will then be adjusted to conform to any new information.

How Do You Tell Whether You Have a Federal or Private Loan?

To best understand your options, you must first consider whether you have federal or private loans. Federal student loans—also known as “direct loans” or “government loans”—allow students to borrow money for college directly from the federal government. There are a few different types of federal student loans for students, each with its own set of standards.

In simple terms, any student loan not issued by the government is considered a private student loan. Student loans other than FAFSA loans can help those who don’t qualify for a federal student loan or whose federal student loan doesn’t cover enough of their expenses. A qualified student debt lawyer may also be able to help you understand what kind of loans you have if you’re still unsure.

If You’re Seeking Relief for Your Private Loans in Arizona, McCarthy Law Can Help

If you have private student loans, forgiveness may seem too good to be true. However, there are legitimate ways to reduce your debt if you have the right student loan lawyer by your side. That’s where the attorneys at McCarthy Law in Arizona come in. If you wish your private loan qualified for an income-based repayment plan, consider contacting our attorneys who can give you practical legal advice after assessing your situation and determining the most tactical method that will have you feeling financially reassured.

Our student loan debt settlement program at McCarthy Law begins when a licensed attorney gets in touch with your student loan lenders and begins negotiating to reduce your private loans’ interest and principal. Following a successful student loan settlement, you may end up paying only a small portion of your original balance. The rest of the debt is forgiven, and the settlement is full and final, leaving you without the strain of student loan debt going forward.

Contact a Skilled Arizona Student Loan Lawyer at McCarthy Law

No college student envisions suffocating under the weight of student loan debt. However, if you’re now plagued with the burden of student loan payments, try contacting the experienced team at McCarthy Law. When you get in touch with our skilled attorneys, we’ll help you explore the best options for getting on top of your finances.

The attorneys at McCarthy Law in Arizona intimately understand the anxiety of student debt and are dedicated to fighting for your financial freedom. To schedule a free consultation with an informed and skilled debt settlement professional, give our office a call at (855) 976-5777 or complete our contact form today.

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