You can choose the Income Based Repayment plan with a Federal Direct (or with an FFEL) loan. Why would you choose such a repayment plan? The answer is simple: forgiveness.
By making your regular monthly payment each month over time, if there’s any interest left over, you can apply for forgiveness. Any forgivness that is granted may be taxable, so beware.
There are two types of government loans which are not eligible for the Income Based Repayment (loan forgivness) plan. They are: 1) Federal Parent PLUS Loans and 2) Perkins Loans. Perkins loans already received a great deal, so they’re not eligible probably for that reason.
If you have a Perkins Loan and you still want to consolidate, you could consider consolidating any other federal loans you have together with the Perkins Loan. Get assistance with determining how to proceed or fully research these and other issues.
If you have a private student loan you are out of luck: Private student loans are not eligible for this federal loan program. Contact your private lender to see if there are any special programs.
You could even apply for the Income-Based repayment plan (loan forgiveness plan) if you have a consolidated loan, as long as that consolidated loan wasn’t used to pay off a Parent Plus Loan.
Parent’s who have this type of loan will not want to consolidate the loan with other federal loans in an effort to get it to qualify for potential loan forgiveness under the Income Based Repayment plan. That’s because a Parent Plus Loan effectively nullifies eligibility for Income Based Repayment for all loans which have been consolidated into one.