Fix My Finances: Is an IBR plan the best way to pay off your student loans?
Welcome to Fix My Finances, Yahoo Finance’s new personal finance series. In each episode, we take a look at one viewer’s financial state of affairs and offer advice, insight and information on a variety of issues, including how to save more, spend less and pay off lingering debt.
In this episode, we speak with Laura, 29, from Brooklyn, New York. She previously worked for the NYC Department of Education, but now works in the private sector for an educational technology company.
Though she’s happy with her salary at her new job, she’s worried that she won’t ever be able to pay off her loans and save money for the future.
Dealing with student loans
Laura is currently on an IBR plan for her student loans, or income-based repayment plan. IBR is a program for repaying federal student loans that bases payments on income and family size.
Now that Laura is in the private sector and making more money, an IBR might not be the best choice going forward because her current plan stretches her debt over a 20-year period at an interest rate of 6%.
One thing Laura can do to get a handle on her situation is to use an online IBR calculator, which can help her figure out the best option to pay off her loans.
Watch the video to learn more about how Laura can fix her finances.
Want to be a part of this new series? We are looking for people in their 20s and 30s who need a money makeover. Apply here.
