There are two federal programs that eligible law students may utilize to reduce their monthly loan payments:
Income-Based Repayment (IBR) helps borrowers keep their monthly loan payments affordable with payment caps based on income and family size. The amount you owe doesn't determine the amount you pay. Rather, the amount you pay is determined by your income and family size. IBR will also forgive remaining debt, if any, after 25 years of qualifying payments.
To access a helpful chart produced by the U.S. Department of Education that shows the IBR monthly caps for 2009 for a sample range of incomes and family sizes, click here.
IBR is available to qualified federal student loan borrowers and covers most types of federal loans made to students. To enter IBR, you have to have enough debt relative to your income to qualify for a reduced payment. If you are married, you should be aware that both your spouse's income and your own income are considered to determine the resources you have available to make payments on your federal student loan(s). This is true whether or not your spouse is also making student loan payments.
Therefore, under current IBR regulations, when two married individuals both have student loan debt and file taxes jointly, they could be expected to pay up to double the monthly loan payment of two unmarried borrowers in otherwise identical situations. However, the U.S. Department of Education has agreed to revisit this rule and factor in both spouses' debts when calculating one applicant's IBR payments, but that change does not go into effect until July 2010.
Public Service Loan Forgiveness
This program is for people with federal student loans who work in a wide range of "public service" jobs, including jobs in government and nonprofit 501(c)(3) organizations. If you work in public service and have reduced loan payments through IBR, your remaining balance after 10 years in a public service job could be canceled if you made loan payments for each month of those 10 years.
The Public Service Loan Forgiveness Program is available only if you have Federal Direct Loans and you make 120 monthly payments under the Direct Loan Program. If you have FFEL loans, you may be eligible to consolidate them into the Direct Loan Program to take advantage of the Public Service Loan Forgiveness Program. However, only the payments made while in the Direct Loan Program will count toward the required 120 monthly payments.
For more information about this program, review the Department of Education's Public Service Loan Forgiveness Program Fact Sheet.