Seriously, people: This student loan repayment plan is amazing

Seriously, people: This student loan repayment plan is amazing

A friend recently reached out for help with her student loans. She owes $150,000 and is completely overwhelmed. Just staying on top of her loan paperwork—let alone figuring out the best repayment plan—feels like a part-time job, which is hard to handle when you work 100 hours a week. Literally. (She’s a surgeon.) She also figured that because she’s about to make six figures, she wouldn’t qualify for a new repayment program that basically allows you to pay less each month. The good news is she was wrong. And this might help you, too.

This generous new repayment plan is IBR, or income-based repayment. The gist is that if your federal student loan balance is more than (or about equal to) your salary, you may qualify to pay according to how much you make, rather than how much you owe. Usually this means lower monthly payments and, therefore, more cash on hand every month.

For example, if you make $30,000 and owe $25,000, your payments could go from $287 per month on the standard 10-year plan to $172 under IBR. If your salary is really low (under $16,245 as a single person), you don’t have to pay a cent until your income rises. And if you’re eligible for loan forgiveness, your debts can be erased after ten years of timely payments, meaning you’ll save tens of thousands of dollars. For my friend the surgeon, IBR lowered her payments by about $200 a month.

Hardly anyone knows about IBR, even though it’s been around since July 1, 2009. Banks don’t have much incentive to spread the word, since IBR borrowers typically pay banks less money each month. By law, student loan lenders have to offer IBR if you qualify, but they don’t have to bug you to sign up. (That’s my job.)

So, please, if you (or someone you know) has student loan debt, go to and see if you qualify. One minute (and a quick phone call to your loan servicer) could save you thousands of dollars.

And since we’re talking about student loans, here are 5 more tips for dealing with yours:

Know where your loans are

It sounds obvious, but between the time you applied for a loan and now, your lender could have sold the loan to another lender, you might have forgotten about loans from your youth, or you may have moved and not received all your loan notifications. The National Student Loan Data System ( can help you locate all your federal loans.

No matter what you do, pay on-time

Missing a payment means your credit score—basically the GPA of your financial life—will plunge. The good news is: paying on-time means that your credit score will improve! To get a free estimate of your credit score, try

Attack any credit card debt; worry less about student loans

Credit cards carry an interest rate of about 16%; your federal student loans typically carry less than 7%. Prioritize your credit card debt.

Study up on repayment (and forgiveness)

IBR is not the only game in town. There are other repayment programs, which may make more sense for your situation. You can also get your debt reduced or wiped out by teaching at a low-income school, working in the Peace Corps, being a nurse, working in public service, and more. For information, check out

Don’t forget to deduct

You may be able to deduct interest on your student loan payments (up to $2,500 per year). For example, if you’re in the 25% tax bracket and you paid $1,500 interest this year on your student loans, you’ll get to cut $375 off your tax bill.

How are you handling your student loan debt?

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