Income-based repayment on student loans is not all it's cracked up to be

The new income-based repayment program for federal student loans has been getting a lot of favorable press lately, and not entirely wrongly.

Here's how it works: If you have federal student loans and are having trouble making payments, signing up for the IBR program will cap your monthly federal student loan payments at 15% of whatever your income is over $16,000 per year. If you earn less than $16,000, you don't have to make any payments. Any money you owe after 25 years is forgiven.

The downside to the program is that unless you were going to take more than 25 years to pay off your loans, that second part won't help. It will just minimize your monthly payments while increasing the amount of interest you'll pay over the life of the loan.