Slate has a law school debt-trap article that details a new way that public interest law students can survive with 100k of debt on their backs.  Most people know about the plan where you’d work for 10 years at for the govt or a non-profit and they’ll forgive all your federal debt.

But this presents a new alternative called IBR — Income Based Repayment

The first program won’t be up and running until July 2009, but it could certainly benefit many underpaid and overdebted do-gooders. The Department of Education essentially caps the percentage of your discretionary income you are expected to pay toward your student loan debt.

Info is here, on the Dept. of Education’s site including this helpful chart.

Who can use IBR? IBR is available to federal student loan borrowers in both the Direct and Guaranteed (or FFEL) loan programs, and covers most types of federal loans made to students, but not those made to parents (click here for more about qualifying loans). To enter IBR, you have to have enough debt relative to your income to qualify for a reduced payment. That means it would take more than 15 percent of whatever you earn above 150% of poverty level to pay off your loans on a standard 10-year payment plan ….

How does IBR make payments more affordable? IBR uses a kind of sliding scale to determine how much you can afford to pay on your federal loans. If you earn below 150% of the poverty level for your family size, your required loan payment will be $0. If you earn more, your loan payment will be capped at 15 percent of whatever you earn above that amount. Except for the highest earners, that usually works out to less than 10 percent of your total income.

Hopefully this program will allow more people to work in public interest jobs and allow those already in to live more comfortably.

Related posts:

1. Help with Student Loans, Starring Shrinking Gremlins
2. Proposal to Include Bar Exam Costs Within Tuition
3. Is Your Law School Tuition Being Wasted?