When you first look into the IBR program to help you with student loan repayment, you likely are most concerned with keeping your head above water. This program is designed to help you limit your monthly payments so that you can keep a roof above your head and feed your family. In the short term, it certainly accomplishes that if you qualify. IBR will limit your payments to small percentages of your income based on family size, the poverty level and your family’s earnings in any given year. In the long term, however, there are some additional ramifications – positive and negative – that come with participation in the IBR program.

Here are a few things to consider:

• The government may pay your interest – for the first 3 years.
If your reduced payment does not cover the interest on your loans, the government will pay the interest at least on subsidized Stafford Loans for your first 3 years in IBR. Other interest and interest after that 3 years will be added to your accumulated debt. This means that your debt may still grow under the IBR program. However…

• After 25 years, your debt may be forgiven.
You have to make qualifying payments in a timely fashion for that entire 25 years. If you do so, then remaining debt that was covered under the IBR program will be forgiven at that time. However…

• You may have to pay income taxes on that forgiven debt.
Presently, forgiven debt counts as income. You may be taxed on that income based on IBR policies. Congress is trying to change this, but the changes may or may not be successful. However…

• If you qualify for student loan debt forgiveness because of a community service job, then these income taxes may not apply.
You will have to work with a debt counselor to determine which forgiven amounts will be taxed and which ones will not.

As you can see, there is a lot more to IBR than just lower monthly payments. Make sure you have all the facts as they relate to you personally before you make a decision about the program.