Informed Decision

After learning all of the federal options that are available to you, choose your best repayment option. Many qualify for $0 Payment.

 

Income-Driven Repayment Plans for Federal Student Loans

What is an income-driven repayment plan?

An income-driven repayment plan is a repayment plan that sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size. The U.S. Department of Education offers four income-driven repayment plans: Revised Pay As You Earn Repayment Plan (REPAYE Plan), Pay As You Earn Repayment Plan (PAYE Plan), Income-Based Repayment Plan (IBR Plan), and Income-Contingent Repayment Plan (ICR Plan). Most federal student loans are eligible for at least one income-driven repayment plan.

How are monthly payment amounts determined under income-driven repayment plans?

The chart below shows how payment amounts are determined under each income-driven plan. Depending on your income and family size, you may have no monthly payment at all. You can estimate your payments under these plans using the Repayment Estimator at StudentAid.gov/repayment-estimator.

* For the IBR Plan, you are a new borrower on or after July 1, 2014, if you had no outstanding balance on a William D. Ford Federal Direct Loan (Direct Loan) Program loan or Federal Family Education Loan (FFEL) Program loan when you received a Direct Loan on or after July 1, 2014. (Because no new FFEL Program loans have been made since June 30, 2010, only Direct Loan borrowers may qualify as new borrowers on or after July 1, 2014.)

IBR Plan

  • Generally 10 percent of your discretionary income if you are a new borrower on or after July 1, 2014*, but never more than the 10-year Standard Repayment Plan amount
  • Generally 15 percent of your discretionary income if you are not a new borrower on or after July 1, 2014*, but never more than the 10-year Standard Repayment Plan amount

ICR Plan

The lesser of the following:

  • 20 percent 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

 

 

How long will I be in repayment under each plan?

Under all four plans, any remaining loan balance is forgiven if your federal student loans aren’t fully repaid at the end of the repayment period. For any income- driven repayment plan, periods of economic hardship deferment and periods of repayment under certain other repayment plans will count toward your total repayment period. Whether you will have a balance left to be forgiven at the end of your repayment period depends on a number of factors, such as how quickly your income rises and how large your income is relative to your debt. Because of these factors, you may fully repay your loan before the end of your repayment period.

page3image7672

Repayment Plan

page3image8728 page3image8888 page3image9048

Repayment Period

page3image10696
page3image11296

REPAYE Plan

page3image12672 page3image13120

20 years if all loans you are repaying under the plan were for undergraduate study
25 years if any loans you are repaying under the plan were for graduate or professional study

page3image15800
 

PAYE Plan

20 years

page3image19312

IBR Plan

page3image20520 page3image20968

20 years if you are a new borrower on or after July 1, 2014
25 years if you are not a new borrower on or after July 1, 2014

page3image23536 page3image23856
 

ICR Plan

page3image26816

25 years

Note: If you’re paying under an income-driven repayment plan and are eligible for Public Service Loan Forgiveness, you may qualify for forgiveness of any remaining Direct Loan balance after you have made 10 years of qualifying payments.page3image32048

  • Who is eligible for income-driven repayment?

REPAYE Plan

Any borrower with eligible federal student loans may make payments under this plan.

PAYE and IBR Plans

Each of these plans has an eligibility requirement you must meet to qualify for the plan. To qualify, the payment you would be required to make under the PAYE or IBR plan (based on your income and family size) must be less than what you would pay under the Standard Repayment Plan with a 10-year repayment period.

If the amount you would have to pay under the PAYE or IBR plan (based on your income and family size) is more than what you would have to pay under the 10-year Standard Repayment Plan, you wouldn’t benefit from having your monthly payment amount based on your income, so you don’t qualify. Generally, you’ll meet this requirement if your federal student loan debt is higher than your discretionary income or represents a significant portion of your annual income.

In addition to meeting the requirement described above, to qualify for the PAYE Plan you must also be a new borrower as of Oct. 1, 2007, and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011. You’re a new borrower if you had no outstanding balance on a Direct Loan or FFEL Program loan when you received a Direct Loan or FFEL Program loan on or after Oct. 1, 2007.page3image44976

 

ICR Plan

Any borrower with eligible federal student loans may make payments under this plan

Will I always pay the same amount each month under an income-driven repayment plan?

No. Under all of the income-driven repayment plans, your required monthly payment amount may increase or decrease if your income or family size changes from year to year. Each year you must “recertify” your income and family size. This means that you must provide your loan servicer with updated income and family size information so that your servicer can recalculate your payment. You must do this even if there has been no change in your income or family size.

Your loan servicer will send you a reminder notice when it’s time for you to recertify. To recertify, you must submit another income-driven repayment plan application. On the application, you’ll be asked to select the reason you’re submitting the application. Respond that you are submitting documentation of your income for the annual recalculation of your payment amount.

Although you’re required to recertify your income and family size only once each year, if your income or family size changes significantly before your annual certification date (for example, due to loss of employment), you can submit updated information and ask your servicer to recalculate your payment amount at any time. To do this, submit a new application for an income-driven repayment plan. When asked to select the reason for submitting the application, respond that you are submitting documentation early because you want your servicer to recalculate your payment immediately.

What types of federal student loans are eligible to be repaid under an income-driven repayment plan?

 

Loan Type

page4image17248 page4image17408

REPAYE Plan

page4image18624 page4image18784

PAYE Plan

page4image20000 page4image20160

IBR Plan

page4image21376 page4image21536

ICR Plan

page4image23024 page4image23344
 

Direct Subsidized Loans

page4image25032 page4image25328 page4image25912

Eligible

page4image27072 page4image27856

Eligible

page4image29016 page4image29800

Eligible

page4image30960 page4image31256 page4image31840

Eligible

page4image33016

Direct Unsubsidized Loans

Eligible

Eligible

Eligible

Eligible

 

Direct PLUS Loans made to graduate or professional students

page4image41120 page4image41440 page4image41880

Eligible

page4image42880 page4image43320

Eligible

page4image44320 page4image44760

Eligible

page4image45760 page4image46200

Eligible

page4image47368
      page4image49472 page4image49896

Direct PLUS Loans made to parents

Not eligible

Not eligible

Not eligible

Eligible if consolidated*

 

Direct Consolidation Loans that did not repay any PLUS loans made to parents

page4image57488 page4image58088 page4image58248

Eligible

page4image59248 page4image59688

Eligible

page4image60688 page4image61128

Eligible

page4image62128 page4image62408 page4image62568

Eligible

page4image63576 page4image63736
       

Direct Consolidation Loans that repaid PLUS loans made to parents

Not eligible

Not eligible

Not eligible

Eligibl

 

 
page5image2544

Loan Type

page5image3760 

REPAYE Plan

page5image5296 page5image5456

PAYE Plan

page5image6672 page5image6832

IBR Plan

page5image7888 page5image8048 page5image8208

ICR Plan

page5image9848
page5image10296

Subsidized Federal Stafford Loans (from the FFEL program)

  page5image12136  page5image12880

Eligible if consolidated*

page5image14096 page5image14256 page5image14576 page5image15008

Eligible if consolidated*

page5image16368 page5image16816 page5image16976 page5image17136

Eligible

page5image18136 page5image18416 page5image18840

Eligible if consolidated*

page5image20088
  page5image20976 page5image21400

Unsubsidized Federal Stafford Loans (from the FFEL program)

Eligible if consolidated*

Eligible if consolidated*

Eligible

Eligible if consolidated*

 

FFEL PLUS Loans made to graduate or professional students

   page5image30360

Eligible if consolidated*

page5image31568 page5image31888 page5image32320

Eligible if consolidated*

page5image33680 page5image34120 page5image34280

Eligible

page5image35280 page5image35720

Eligible if consolidated*

page5image36968
  page5image37856 page5image38280

FFEL PLUS Loans made to parents

Not eligible

Not eligible

Not eligible

Eligible if consolidated*

 

FFEL Consolidation Loans that did not repay any PLUS loans made to parents

   

Eligible if consolidated*

page5image48176 page5image48496 page5image48656 page5image48928

Eligible if consolidated*

page5image50288 page5image50448 page5image50728 page5image50888

Eligible

page5image51888 page5image52328

Eligible if consolidated*

page5image53576
   

FFEL Consolidation Loans that repaid PLUS loans made to parents

Not eligible

Not eligible

Not eligible

Eligible if consolidated*

 

Federal Perkins Loans

   

Eligible if consolidated*

page5image64456 page5image64616 page5image65152

Eligible if consolidated*

page5image66344 page5image66504 page5image67208

Eligible if consolidated*

page5image68288 page5image68568 page5image68728

Eligible if consolidated*

page5image69816 page5image69976
     

*If a loan type is listed as “Eligible if consolidated,” this means that if you consolidate that loan type into a Direct Consolidation Loan, you can then repay the consolidation loan under the income-driven plan.

Note that only federal student loans can be repaid under the income-driven plans. Private student loans are not eligible.

Is an income-driven repayment plan right for me?

Income-driven repayment plans usually lower your federal student loan payments. However, whenever you make lower payments or extend your repayment period, you will likely pay more in interest over time—sometimes significantly more. In addition, under current Internal Revenue Service (IRS) rules, you may be required to pay income tax on any amount that’s forgiven if you still have a remaining balance at the end of your repayment period.

How do I decide which income-driven repayment plan to choose?

If you’ve decided that an income-driven repayment plan is right for you, you’ll want to choose the plan that provides the most benefit to you based on your individual circumstances. Although all four income-driven plans allow you to make a monthly payment based on your income, the plans differ in terms of who qualifies, how much you have to pay each month, the length of the repayment period, and the types of loans that can be repaid under the plan.

If you have only Direct Loans, you can choose from all four income-driven repayment plans. If you’re not sure which plan to choose, you have the option of requesting the income-driven plan that provides the lowest payment amount. Your servicer will determine which plans you qualify for and will then place you on the plan with the lowest monthly payment. If you have FFEL Program loans, your only income-driven repayment plan option is the IBR Plan. However, if you

 

consolidate your FFEL Program loans into a Direct Consolidation Loan, you’ll then have access to the REPAYE, PAYE, and ICR plans. Find out more about loan consolidation at StudentAid.gov/consolidation.

How do I apply for an income-driven plan?

Before you apply for an income-driven repayment plan, contact your loan servicer if you have any questions. Your loan servicer will help you decide whether one of these plans is right for you.

To apply, you must submit an application called the Income-Driven Repayment Plan Request. You can submit the application online at StudentLoans.gov or on a paper form, which you can get from your loan servicer. The application allows you to select an income-driven repayment plan by name, or to request that your loan servicer determine what income-driven plan or plans you qualify for, and then place you on the income-driven plan with the lowest monthly payment amount.

When you apply, you’ll be asked to provide income information that will be used to determine your eligibility for the PAYE or IBR plans and to calculate your monthly payment amount under all income-driven repayment plans. This may be either your adjusted gross income (AGI) or alternative documentation of income.

Your AGI will be used if

  • you filed a federal income tax return in the past two years, and

  • your current income isn’t significantly different from the income reported on your most recent federal income tax return.

    You can provide your AGI in one of the following ways:

  • Apply using the online Income-Driven Repayment Plan Request and use the IRS Data Retrieval Tool in the application to transfer income information from your federal income tax return.

  • Use the paper Income-Driven Repayment Plan Request and provide a paper copy of your most recently filed federal income tax return or IRS tax return transcript.

    If you haven’t filed a federal income tax return in the past two years, or if your current income is significantly different from the income reported on your most recent federal income tax return (for example, if you lost your job or have experienced a drop in income), alternative documentation of your income will be used to determine your eligibility and calculate your monthly payment amount. You can provide alternative documentation in one of the following ways:

    • If you currently receive taxable income, you must submit a paper Income-Driven Repayment Plan Request with alternative documentation of your income, such as a pay stub.

    • If you currently don’t have any income or if you receive only untaxed income, you can indicate that on the online or paper application. In this case, you’re not required to supply further documentation of your income.