Income Based Repayment and Public Service Loan Forgiveness are Here!

Anne.Oeldorf's Flickr Photostream

Anne.Oeldorf's Flickr Photostream

The College Cost Reduction and Access Act of 2007 officially goes into effect today, July 1st, and income-based repayment (IBR) applications are now available from many major lenders, including the U.S. Department of Education.

According to, you should contact your lender directly to apply for IBR.

Also, take a look at the resources mentioned in this post as well as’s FAQ.

According to, if you have exhausted other avenues and still face “serious problems” applying for IBR, contact the Federal Student Aid Ombudsman’s Office at the U.S. Department of Education: 877-557-2575, fsaombudsmanoffice [at], or learn more & submit your problem online at

Income-Based Repayment (IBR) caps monthly direct and guaranteed (FFEL) student loan payments based on the borrower’s income and family size. According to IBRinfo, “For most eligible borrowers, IBR loan payments will be less than 10 percent of their income – and even smaller for borrowers with low earnings. IBR will also forgive remaining debt, if any, after 25 years of qualifying payments.” Besides taking out the right kind of loan to start with (or consolidating your loans into the Direct Loan Program), it’s important to note that if you get married, your spouse’s income counts when calculating your monthly payment. Read more about the College Cost Reduction and Access Act here.

The other CCRAA program that goes into effect is Public Service Loan Forgiveness (PSLF) which retires the direct or guaranteed (FFEL) student loan debt of public service professionals who’ve been making ten years of qualified payments on their loans. Counting as “public service” includes 501(c)(3) nonprofit employment; government (federal, state, local, tribal), military, public school and college employment; and national service participation (like AmeriCorps and Peace Corps). Read the fine print of what counts as “qualified payments.”

2 thoughts on “Income Based Repayment and Public Service Loan Forgiveness are Here!

  1. Pingback: College Cost Reduction Act – Basic Facts and New Resources to Help You « The New Service

  2. Excellent article. As a student loan holder myself, it’s very important to know all options available to help relieve my financial burden during these tough economic times. It is important to educate yourself and explore all options in order to keep your head above water.

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