Drowning in student loan debt?

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NEW YORK (CNNMoney.com) -- 1. Get the details

Starting July 1st, some college grads will be making lower loan payments thanks to the government's new Income Based Repayment Plan. This program calculates your monthly payments based on your income and your family size.

You may qualify if you have a Stafford, Graduate PLUS, or consolidation loans made under either the Direct Loan or Federal Family Education Loan programs. You don't qualify if you have a Parent PLUS loan. Your debt must be 1.5 times more than gross income.

You can calculate your eligibility at finaid.org/calculators/ibr.phtml. The loans can be new or old, and for any type of education, including undergraduate, graduate or professional job training.

2. How it works

If you qualify for Income Based Repayment, your monthly payments will be pegged to how much you can afford each month.

Typically your loan payments will be less than 10% of your monthly gross income. If you make 150% or less of the federal poverty line (which is about $16,245 for a single person) you won't pay anything until your salary increases.

So, the people who will really benefit from this program: grads with a lot of student loan debt who can't find jobs, college grads that have a lot of debt compared to income. And people who are going into public service. That's because if you're in this plan, you're eligible for the Public Service Loan Forgiveness Program that wipes out your debt if you've worked full time in the public sector for 10 years. Income Based Repayment also will forgive student-loan debt that remains after 25 years of payments.

But ... there are downsides to this program. You pay more in interest over the life of your loan. A reduced payment in Income Based Repayment usually extends how long you have to pay your loan back.

3. Get started now

Talk to your lender if you think you're a candidate. The lender may ask for a copy of last year's tax return. More likely they will have you complete IRS Form 4506-T to have the IRS send them a tax transcript of your federal income tax return as filed with the IRS says Mark Kantrowitz of finaid.org.

So, if you've lost a job since then or endured some other financial hardship, make sure you document that and let your lender know. The Department of Education has more information. Go to studentaid.ed.gov.

-- CNN's Jen Haley contributed to this article.

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