Ask A Banker

    "I recently graduated from college and I was able to get a good job, but my salary is only slightly more than my monthly student loan payments. What advice would you give to someone struggling with student loan debt?" 

    You are certainly not alone in this. I was just recently asked this same question from a friend on behalf of her daughter. Her daughter, Janie graduated in May from a private university and, along with her sheep skin, she left academia with a 6 figure student loan. Janie is one of the lucky recent graduates that has landed a job, but her meager salary is only slightly more than her monthly payment for the student loans. 

    This is a scenario we hear much too often these days. The good news is that the federal government has several programs available for those struggling with student loan debt.

    Income Contingent Repayment Plan (ICR)

    ICR has been available since 1994. Only Direct student loans are eligible for this program. Under this plan, the monthly payments are made for a maximum of 25 years and are based on your income, family size and the outstanding balance of your loan. This program results in higher payments than the more favored Income Based Repayment Plan (IBR); however, if you are ineligible for IBR, you may qualify for ICR.

    Income Based Repayment Plan (IBR)

    IBR is available to all student loan borrowers with high debt relative to income. IBR is not available if you are in default on your student loans or for any private student loans. This plan is available for both Direct and Federal Family Education Loan (FFEL) student loans. Interesting to note - loan forgiveness under IBR and ICR is taxable income; however, Congress is working on legislation to change this to non-taxable income. 

    To read more information on the ICR and the IBR plans, visit

    Pay As You Earn Repayment Plan (PAYE)

    Effective December 21, 2012, the PAYE became available to student borrowers with Direct loans. In order to be eligible, you must have had no outstanding balance on a Direct Loan or a FFEL Program Loan as of October 1, 2007. In addition, your student loan debt must be high relative to your income.CLICK HERE to go to a PAYE calculator to help your estimate if you would be eligible for the program.

    The PAYE program has a lower monthly payment cap than the IBR plan. In addition, it offers loan forgiveness after 20 years of repayment rather than 25 years in the IBR program. 

    One Application:
    All of these plans can be a bit overwhelming. The good news is that you can apply for ICR, IBR and PAYE repayments plans all in one spot by visiting student
     This question was answered by Lisa Hull, Vice President in our Trust Department.
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