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Income-Based Repayment

The College Cost Reduction and Access Act of 2007 introduced income-based repayment (IBR) as a more generous alternative to income-sensitive and income-contingent repayment. How does IBR work?

  1. It is available in both the Direct Loan and FFEL programs.
  2. It’s designed to help borrowers who expect to make a great deal more money over time.
  3. It caps payments based on the average amount other graduates currently pay each year on federal loans.

“A” is correct. IBR was developed to help borrowers who intend to pursue jobs with lower salaries, such as careers in public service. It caps their monthly payments at a percentage of their discretionary income, based on their income and family size, not the total amount borrowed.