You signed the loan papers to get the financing that allowed you to register for classes. Then you enjoyed years of undergraduate classes, tests, parties and friendships. You graduated and soon received the two most important documents of your life–your diploma and the letter scheduling your monthly debt payments.

Perhaps you are fortunate and are able to repay your debt after having secured a meaningful and well paying job. If so, this article may not be of interest to you. However , you may be one of the millions of Americans who is having difficulty making your monthly student payments and are being forced to chose between rent, mortgage or student debt payments. Perhaps you are a recent graduate who dreads the end of your grace period, wondering how you will be able to afford this new monthly obligation. If you are, please read on and learn about a federal program that lets you reduce your required payment to a fraction of  the regular payment or even to zero.

The Department of Education recently introduced a program called the Income Based Repayment Program (IBR).

The IBR program lets you calculate your monthly payments based on your income and household size, regardless of the amount of the debt.

The formula is based on two numbers.

150 percent of the U.S. poverty level which varies based on household size.

15 percent of any income over and above the poverty level.

For example, if you have three people in your household (you, your spouse and one child) 150 percent of the poverty level is  $28,635. If you earned $40,000 on your most recent tax return, the number used to calculate your payment is $40,000 minus $28,635 or  $11,365  Multiply that number by 15 percent and that is the annual payment. Divide that by 12 and that is your IBR monthly payment or $142.

If you had $50,000 in debt, your regular monthly payment would be as high as $575 while your payment under the IBR in the above scenario would be only $142 for a monthly savings of $432..

Or if you have six people in your household and you earn $50,000, your IBR payment would be only $44 compared to $575 ($50,000 debt) for a savings of $531.

If you are a recent graduate the Pay as You Earn program cuts your payment by a third or $95 in the first scenario and $30 in the second.

The chart below lets you calculate what your payment would be under IBR

If you aren’t sure what your current payments are, visit www.nslds.ed.gov (nslds.ed.gov) to retrieve a schedule of all of your student debts. (You will need your name, date of birth, social security number and pin.) Compare that amount to the amount in the chart above and you will be able to determine if IBR makes sense for you.

Here are some tips you should be aware of:

You don’t have to include the income of your spouse. If she’s a banker and you’re a teacher you can file separate tax returns and use just your income to determine monthly payments.

Not all loans are eligible. Ask your loan servicer which of your loans are eligible for IBR.

You can consolidate loans but be careful not to consolidate ineligible loans with good loans. You could end up tainting the good loans and not be able to use IBR on them.

There are generally two types of loans, subsidized and unsubsidized. Rates are lower for subsidized and there are certain benefits in regards to IBR as well.

Be aware that any scheduled payments that are not made are added to the principal due. Interest will accrue on this added principal. Delaying payments could add to the total you eventually pay. It’s important you are aware of that.

There are programs that allow you to discharge remaining debt after 10, 20 or 25 years of payments.

Like any federal program there are many details to the IBR program, but the core benefit is that you can lower your monthly payments at a time when you need relief. For more information you can go to the Department of Education website at www.studentaid.gov (studentaid.gov)  or contact your loan servicer. You can also visit www.drstudentdebt.com (www.drstudentdebt.com) and receive a free guide to the details of the various student loan programs.

The federal government has helped banks, corporations and homeowners obtain relief from debt. Isn’t it time you benefitted as well. Relief is available. It’s up to you to take advantage of these programs and to not spend the rest of your life paying for your education.

David Siegel is a Home Lending Specialist with Citibank in the Englewood,NJ office. David also has worked as an attorney specializing in Bankruptcy and debt resolution.

By David Siegel