One thing to be aware of: The faster you pay off loans the less you pay in interest over the life of the loan.
Michael Ryan, vice president with American Student Assistance, which counsels borrowers, says the income-based repayment plan is useful for people who now aren't in a position to pay student loans, "but also not very likely to be better off six months or a year from now."
To see if you qualify, contact your lender or loan servicer. Check out the Education Department's income-based repayment calculator at studentaid.ed.gov to see what your payments might be.
If you're already in default, you can still take advantage of income-based repayment.
The government offers an opportunity to rehabilitate defaulted loans. You will be given a new monthly payment based on your financial situation.
You must make at least 9 out of 10 payments to get back in good graces. If you can't afford this new payment, says Kantrowitz, of FinAid.org, negotiate for a lower sum.
Once loans are rehabilitated, you can apply for the income-based plan.
"Your monthly payment will be lower in most cases than the amount you were paying under wage garnishment," Kantrowitz says.