The Implications of Income-Based Repayment and Public Service Loan Forgiveness on Student Loan Debt

Abstract

The Income-Based Repayment (IBR) plan decreases the burden of student loan debt for borrowers with high levels of debt or relatively low incomes. For borrowers with high debt or low income, student loan debt payments are based on income instead of the amount of debt and the interest rate. The unpaid balance is forgiven after 20 years. The Public Service Loan Forgiveness (PSLF) program allows unpaid student loan debt to be forgiven after 10 years for those that work for the government, non-profit, and other charitable organizations. There are numerous benefits and drawbacks to these programs.