As federal student loan borrowers strategize around how to fit monthly payments back into their budgets following the end of the federal student loan payment and interest pause, Income-Driven Repayment (IDR) could be a good option to consider.
For those struggling with high monthly payments in relation to their income, enrolling in an IDR plan could help alleviate the pressure that student loan debt can put on a budget. Let’s take a closer look at different plans within the IDR program, how monthly payment amounts are calculated within different plans, and how you can apply.
What is Income-Driven Repayment (IDR)?
IDR provides federal borrowers with options other than forbearance when they have trouble making their student loan payments through the government’s traditional repayment plans such as the Standard Repayment Plan, Gradudated Repayment Plan, or Extended Repayment Plan.
Under an IDR plan, monthly payments are typically lower than the payments a borrower would make in the 10-year Standard Repayment Plan. IDR also provides a path to eventual forgiveness after 10, 20, or 25 years of repayment, depending on which plan you’re enrolled in, your loan type(s) of loans you have, and the amount of debt you have.
Each plan uses a different formula to set up repayment structures based on a borrower’s adjusted gross income and family size. Borrowers typically qualify for more than one type of IDR plan. For more details on each IDR plan and help understanding which one might be right for your financial situation, reach out to one of our student loan experts or visit our other student loan repayment resources:
For more details on applying for IDR on a path to forgiveness, visit our other student loan forgiveness resources:
IDR loan type eligibility
IDR Loan Type Eligibility
|
IDR Plan |
Eligible Loans |
|
ICR |
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans made to students
- Direct Consolidation Loans (including Direct Consolidation Loans made after July 1, 2006 that repaid PLUS loans made to parents)
|
|
IBR |
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Subsidized Federal Stafford Loans
- Unsubsidized Federal Stafford Loans
- Direct or FFEL PLUS Loans made to students
- Direct or FFEL Consolidation Loans that do not include PLUS loans made to parents
|
|
PAYE |
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans made to students
- Direct Consolidation Loans that do not include PLUS loans (Direct or FFEL) made to parents
|
|
SAVE / REPAYE |
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans made to students
- Direct Consolidation Loans that do not include PLUS loans (Direct or FFEL) made to parents
|
Income-Driven Repayment plan eligibility requirements
To understand if you’re eligible for IDR, you will first need to understand what type(s) of federal student loans you have and what your household income is. Review the different types of plans to better understand your eligibility for each type.
If you have parent PLUS loans, you must consolidate them to become eligible for IDR. If you’re unsure or have questions, you could schedule a free call with a student loan specialist for guidance. Learn more about qualifying for student loan forgiveness through IDR here.
Also note that borrowers pursuing Public Service Loan Forgiveness (PSLF),1 are typically enrolled in an IDR plan. PSLF is a US government program available exclusively to federal borrowers employed at qualifying nonprofits and government organizations.
Income-Driven Repayment and Public Service Loan Forgiveness (PSLF)
Through PSLF, Federal Direct Loans are forgiven after ten years of payments under a qualifying repayment plan. To be eligible for PSLF, you must:
- be employed by a qualifying nonprofit OR a US government organization at any level (federal, state, local, or tribal) – including US military service.
- work full-time for that agency or organization
- have Federal Direct Loans (or consolidate other federal student loans into a Direct Loan)
- be enrolled in a qualifying repayment plan
- make 120 qualifying payments
While IDR is available to federal borrowers in both the private and public sector, PSLF is exclusively available to a subset of federal borrowers working in government or at qualifying nonprofits. Learn more about the program at studentaid.gov or see our PSLF resources:
How is my income calculated for an Income-Driven Repayment plan?
Generally, your monthly payment amount under an IDR plan is a percentage of your discretionary income, and the percentage varies by plan. The chart below breaks down how payment amounts are determined under each plan, and any changes to the plan following the SCOTUS ruling announced June 30, 2023.
Depending on your income and family size, you could have no monthly payment at all – a situation that is even more likely under the SAVE plan.
IDR Comparison Chart
|
Applications for SAVE, other IDR plans, and loan consolidation are available on http://studentaid.gov. You can also submit a PDF application to your loan servicer by uploading it to your servicer’s website, or mailing it to them. Expect a delay in processing times. The Education Department recommends checking its website for updates – there is no processing time estimate available. |
|
Plan |
Monthly Payments |
Repayment Period |
Status |
|
SAVE (formerly REPAYE) |
- 5% of discretionary income for Undergraduate Loans
- 10% of discretionary income for Graduate Loans
- Weighted average for borrowers who have both
|
- 10 years for low-balance borrowers (less than $12,000)
- 20 years for only undergraduate loans
- 25 years for any Graduate Loans
|
Replaced REPAYE |
|
Income-Based Repayment (IBR) |
- 10-15% of your discretionary income (and your spouse’s if filing jointly)
- Never more than federal 10-year Standard Repayment Plan amount
|
20-25 years, depending on when you become a new borrower |
Remains available but borrowers cannot select plan after 60 payments on REPAYE that occur on/after July 1, 2024 |
|
Income-Contingent Repayment (ICR) |
The lesser of the following: - 20% of your discretionary income or
- What you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income
|
25 years |
Not accepting enrollments for current students; only available to future borrowers with consolidated Parent PLUS loans |
|
Pay as You Earn (PAYE) |
- 10% of your discretionary income (and your spouse’s if filing jointly)
- Never more than federal 10-year Standard Repayment Plan amount
|
20 years |
Not accepting new enrollments |
Challenges to SAVE
Multiple legal challenges made by states to the Saving on A Valuable Education (SAVE) plan could impact implementation of key aspects of the plan. For the most up-to-date developments, visit studentaid.gov.
Note that other factors beyond loan type could affect your eligibility and whether a certain plan is the right choice for you. Be sure you read the fine print of each plan, and learn more in our Guide to Federal Repayment Programs and Types of Income-Driven Repayment Plans for Your Career.
How to apply for Income-Driven Repayment
Once you understand your IDR plan options, you can apply through the Student Aid website by following these steps:
You can use the estimator tool within your IDR application to compare payments under different plans or to have your loan servicer pick the right one for you. For more details on applying for IDR, visit our other student loan forgiveness resources:
How to maintain your Income-Driven Repayment plan
Once you’ve completed the IDR application process and received confirmation of enrollment, you’ll need to recertify your income each year to remain on the plan and not have a lapse. Your annual recertification will likely fall 12 months after you initially entered your IDR plan, and your student loan servicer should notify you when your time to recertify is coming up. Learn more about annual recertification at https://studentaid.gov/idr/.
Get started: Apply for Income-Driven Repayment
While federal borrowers from a wide range of educational backgrounds and career fields find they qualify for more than one IDR plan, determining which one is right for you requires research, reading the fine print, and staying current on the latest student loan policy developments.
Our dedicated team of student loan specialists stays up-to-date with all repayment and forgiveness programs and can offer guidance and expertise through your IDR application process. For more IDR information, schedule a complimentary 30-minute consultation. Our specialized team can help guide you to the right IDR plan based on your unique financial situation, taking income level, marital filing status, children, possible career trajectory, tax implications, and your financial goals into account.
