At first, Income Based Repayment (IBR) sounds pretty simple. This new plan released in July 2009 is designed to help borrowers pay off their student loans in a responsible manner that will not prevent them from also supporting themselves and their families. If you are struggling to repay your student loans and living at or below the poverty level, then you probably qualify for IBR.

At first, this probably sounds pretty exciting. After all, you could get monthly payments based on your income, you will never pay more than 15 percent of your income over the poverty level , and your payments are reevaluated every year to make sure that you are not overwhelmed by the program. However, the actual calculations are a little more complicated. In fact, some people are deterred by the multitude of numbers on the official site that are designed to let them know whether or not they qualify for this assistance program.

If you have been thinking about applying for IBR but have not been able to wade through the information on the website, here is a brief explanation of how the program works:

IBR caps your loan payments depending on your family size and your salary. For example, if your family income is 20,000 dollars a year and there are more than one person in your household, then you will not be required to make payments because doing so will place you below the poverty level for that amount of income and that family size. Similarly, if your family income is 40,000 a year and you have four or more people in your household, then you also will not be required to make payments. However, with three or fewer then a percentage of that income will be in excess of the poverty level, and you could be required to pay up to 15 percent of your income over the poverty level toward your student loans.

NOTE: this is not 15 percent of 40,000 dollars. It is fifteen percent of 40,000-poverty level for your family size. For example, if you have three family members you might be asked to pay about 2.6 percent of your income (about 1040 dollars per year or 86 dollars a month).

You can use these equations to help you figure out whether or not IBR will improve your situation. In nearly all cases of high debt and low income, it will. Do not be intimidated by the charts, graphs and complicated explanations. If you need help, just call and ask for it. You cannot afford to let this opportunity slide by.