On July 1, 2009, a new payment program was put into place called Income-Based Repayment (IBR). This provides a cap on your monthly federal student loan payments (but ONLY for Federal direct loans), and the balance will be forgiven after 25 years of making proper payments on time.

The cap is based on your income and can go from paying nothing at all to up to 10% of your Adjusted Gross Income (AGI). The lower the AGI, the less you’ll have to pay monthly. They will not accept more than the cap per month.

So here’s the catch: Only Federal direct loans qualify for this plan and the forgiven balance will be considered taxable income.

Yup, so you’re responsible for the taxes! But it’s better than paying off the full balance, right?

You got to prepare yourself for the 25th year to make sure you can deduct enough taxes so you won’t have to owe any after filing. Hopefully, the standard deduction will cover the taxable income, but by that time you might be able to have enough itemized deductions for the year to help cover that.

And parent loans don’t qualify. Private bank student loans don’t qualify.

If you work for the government or a non-profit organization, your direct loan can be forgiven in 10 years.

I don’t want to get into too much detail about these new programs, so you can do your research from here. I just wanted to get the word out some more, since it doesn’t seem to be a hot topic. You can start here and then look around for different perspectives. Tell me what you think.

Happy 27th Birthday, Mike!

Ingredients: organic whole wheat pastry flour, organic buckwheat flour, organic turbinado sugar, organic chocolate chips, organic walnuts, extra virgin olive oil, organic flaxseed meal, organic soy milk, organic baking powder, organic cinnamon, organic salt.

Testing of the yellow, blue, and white diffusers at the beach.

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* Note: Sorry about the watermark right in the middle of some of these photos. I had technical difficulties that resulted in saving over original files with the watermark embedded improperly.