A Couples Approach to Student Loans

If your monthly IBR payment does not cover the full amount of interest that accrues on your loans each month, the federal government will pay any unpaid, accrued interest on subsidized loans for up to three consecutive years. Note that unsubsidized federal student loans (which often account for a large share of student loan debt) are not eligible for this extra help, meaning the accrued interest would be added to the overall student loan debt.

Also, if you qualify for Income Based Repayment and meet other requirements, any federal student loan balance after 25 years of payments will be cancelled.

One key thing to know about Income Based Repayment is that there are several types of loans that do not qualify. These include Parent PLUS loans, private (nonfederal) student loans, and consolidation loans that were used in part to pay off a Parent PLUS loan -- even if a portion of that consolidation loan went to pay off a loan that otherwise would have qualified for Income Based Repayment such as a Stafford loan.

Student Loans: Bringing Debt Under Control

Consolidation loans used strictly to pay off FFEL or Direct loans do qualify.

R.V., one last point to make about your situation: In addition to qualifying for Income Based Repayment, you as a teacher may also qualify for the Public Service Loan Forgiveness program. It will forgive federal student loan debt after 10 years of qualifying eligible employment and on-time payments. Eligible employment includes in the government or nonprofit sectors.

For more information about these programs, visit the "Repaying Your Loans" section of the Department of Education's studentaid.ed.gov and IBRinfo.org, published by the Project on Student Loan Debt.

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

David McPherson is a Certified Financial Planner professional and founder of Four Ponds Financial Planning LLC (www.fourpondsfinancial.com) in Falmouth and Mansfield, Mass. Contact McPherson at david@fourpondsfinancial.com

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