There are a variety of loans available to student borrowers. From federal loans to private loans, there are plenty of ways to get money to pay for school. In the past, the repayment options were quite limited when it came to paying back student loans, however today all that has changed. With consolidation and other repayment methods, graduates see greater ease in paying back their school loans. One of the newest methods for paying back federal school loans, which has recently hit the student loan repayment scene, is income-based repayment or IBR. IBR allows the borrower to pay back their federal loans in accordance with their current income. Here are some of the pros and cons associated with the IBR method.

The Pros of IBR

There are quite a few pros associated with IBR. One benefit is that those who choose IBR to help them with the repayment of their school loans will have a lower monthly payment which is perfect for those individuals on a budget. The IBR method also allows the borrower to have their unpaid subsidized Stafford loan interest paid by the government for three years if the IBR payment doesn’t cover the loan interest. Another benefit of the IBR is that the balance on your loan under the IBR payment regimen will only stay in existence for 25 years and then after that the rest of the loan payments are canceled.

The Cons of IBR

There are also disadvantages to the IBR method to paying back school loan debt. First, the repayment period will usually be longer under this method than with the usual school loan debt repayment method. In addition, since you are paying longer under an IBR, your total interest may also be greater. Lastly, when you take advantage of the IBR you will have to offer up paperwork every year that you repay under IBR which can be time consuming and a pain.

Is IBR Right For You?

Choosing the best repayment method is a tough and serious choice. Since student loans are often quite costly, you want to be sure that you pick the most advantageous repayment option for your individual situation. The best way to figure out if IBR is right for you is to look at your current income level. You will be able to tell if what you are making is adequate enough to pay for all of your necessities and other items in addition to repaying your student loans. Also, check to see if you are eligible for an IBR, as not everyone will have access to this repayment method. Lastly, see if a loan consolidation option will work for you as this may allow you to lower your monthly payments, get a better interest rate and not have to fill out time consuming paperwork each and every year. Loan consolidation is often a good bet instead of the IBR method for those who can consolidate their loans and will be able to make the monthly payments on the consolidated student loan.