When talking about student loans, you may want to know about Great Lakes borrowers Income-Based Repayment. I have found some information about it and you are able to read it below.
Definition of Income-Based Repayment
According to the Student Loan Hero, Income-Based Repayment is defined as a type of income-driven repayment (IDR) which is able to lower your monthly student loan payments. Let’s say that your payments are not affordable because of a high student loan balance compared to your current income. If so, an Income-Based Repayment (IBR) plan is able to provide help which is needed.
On the Student Loan Hero site, it is also explained that the term “Income-Based Repayment” is often misused as a catch-all for the various IDR programs available now. However, it is important for you to know that Income-Based Repayment is one of the four IDRplans which are offered by the Department of Education. Same as other IDR plans, Income-Based Repayment is able to help students who are not able to afford their monthly federal student loan payments under the standard repayment plan.
Great Lakes Income-Driven Repayment
On the website of Great Lakes, it is explained that income-driven repayment (IDR) plans make it easier for federal student loan borrowers to pay back loans in case your debt is high compared to your income. Income-driven repayment is based on your income, family size, the state you live in and federal student loan type.
Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAY) and Income-Contingent Repayment (ICR) are the main plans. How do they work? You can read how they work in general below according to the Great Lakes site.
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- You have to complete the Income-Driven Repayment Plan Request on StudentAid.gov and provide specific information to qualify.
- Each year you will have to recertify, in order to remain eligible for the lowest possible monthly payment amount. Because your income, family size or state of residence change, so your monthly payment amount also will change.
- Based on your loan types and specific situation, your exact plan varies. Let’s say that you recertify each year and qualify. If so, you may have reduced monthly payments for up to 25 years. If there is any remaining balance, it may be forgiven.
- Since income-driven repayment plans usually extend the payment period, you may pay more interest over the life of your loan.
Great Lakes Income-Based Repayment (IBR)
According to the Great Lakes site, here are the eligibility requirements of Income-Based Repayment.
- Federal Family Education loans and Direct loans. Eligibility requirements:
Let’s say that you did not have outstanding balance as of 7/1/2014 and got a new disbursement on or after 7/1/2014:
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- During periods of partial financial hardship, your monthly payments will not exceed 10% of your discretionary income as long as you go on renewing each year.
- Let’s say that a balance remains after 20 years of making qualifying payments. If so, your loans will be forgiven.
All other borrowers:
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- During periods of partial financial hardship, your monthly payments will not exceed 15% of your discretionary income as long as you go on renewing each year.
- Let’s say that a balance remains after 25 year of making qualifying payments. If so, your loans will be forgiven.
- It needs proof of financial hardship.
- Let’s say that you filed your taxes jointly. If so, your spouse’s income and federal student loan debt is used to calculate your monthly payment.
Renewal Requirements
- Let’s say that you do not renew your IBR repayment plan by the deadline. If so, your payments will increase and unpaid interest that has accrued may be capitalized.
Forgiveness Details
- Let’s say that a balance remains after a certain number of years of making qualifying payments. If so, your loans will be forgiven.
Great Lakes Revised Pay As You Earn (REPAYE)
According to the Great Lakes site, here are the eligibility requirements of Great Lakes REPAYE.
- Direct loans only.
- It does not need partial financial hardship, payment will not exceed 10% of discretionary income. However, if you are earning a lot, your monthly paymeny under this plan may be higher than it would be with other plans.
- The income of your spouse and federal student loan debt is used to count your monthly payment, regardless of your tax filing status, with exceptions for borrowers who certify that they are separated or are not able to reasonably access the income of their spouse.
Renewal Requirements
- Let’s say that you do not renew your REPAYE plan by the deadline. If so, you will be placed into the REPAYE Alternative repayment plan and if there are any unpaid accrued interest, it will be capitalized. The period of REPAYE Alternative repayment plan is the lesser of 10 years or whatever is left on your 20- or 25- year REPAYE repayment period and the monthly payment amount will be a steady amount that will be able to pay your loans in full during that period.
- If you decide to leave REPAYE, any unpaid accrued interest will be capitalized.
Forgiveness Details
- Let’s say that a balance remains after a certain number of qualifying payments and years. If so, your loans will be forgiven. Let’s say that you have only undergraduate loans. If so, they will be forgiven after 20 years. In case you have graduate loans, all of your loans including undergraduate loans will be forgiven after 25 years.
REPAYE Alternative Repayment Plan
If you are placed in the REPAYE Alternative repayment plan, here is what you need to know according to the Great Lakes site.
- Payments that you make on this plan do not count toward Public Service Loan Forgiveness.
- The period of repayment plan is the lesser of 10 years or whatever is left on your 20- or 25- year REPAYE repayment period and the monthly payment amount will be a fixed amount that will pay your loans in full during that period.
- Let’s say that you enter REPAYE again. If so, your monthly payment amount may increase. If your payment while you were not in REPAYE was less than what you would have paid if you were in REPAYE, your new monthly REPAYE payment may increase. This is the REPAYE Increased Amount and automatically it will be spread out evenly over the rest of your new REPAYE payments for the life of your loan until your loan is paid in full or forgiven.
To read more about Income-Driven Repayment types or know more about Income-Based Repayment in Great Lakes, you are able to access the website of Great Lakes or contact their customer service.
