Starting in July 2009, a new student loan repayment plan called Income-Based Repayment will be offered for students who have pursued jobs with lower salaries, such as careers in public service. The Income-Based Repayment Plan caps the monthly payments at a percentage of the borrower's discretionary income, which is based on the borrower's income, family size, and total amount borrowed. The monthly payment amount is adjusted annually, based on changes in annual income and family size.
Income-based repayment is only available for federal student loans, such as the Stafford and consolidation loans. It is not available for Parent PLUS loans, consolidation loans that include Parent PLUS loans, or private student loans.
The maximum repayment period is 25 years. After 25 years, any remaining debt will be discharged (forgiven).