7 FAQs About Income-Driven Repayment Plans

Financial AidLoan Repayment4 minutes

On July 18, 2024, a Federal Court issued a stay preventing the Department of Education from operating the Saving on a Valuable Education (SAVE) Plan. We are assessing the ruling and will be in touch directly with borrowers about how this will affect them.

Are you struggling with your federal student loan payments? On an income-driven repayment (IDR) plan, your monthly payment is based on your income and family size. Our newest IDR plan, the Saving on a Valuable Education (SAVE) Plan, has unique benefits that can lower payments for many borrowers. Applying is free.

You can estimate your monthly payments under different repayment plans using Loan Simulator.

1

What income-driven repayment (IDR) plans are available?

There are four different IDR plans:

  • Saving on a Valuable Education (SAVE) Plan—formerly known as REPAYE
  • Income-Based Repayment (IBR) Plan
  • Pay As You Earn (PAYE) Repayment Plan
  • Income-Contingent Repayment (ICR) Plan

The following table compares the maximum monthly payment amounts and repayment periods under each plan, including the new SAVE Plan. The SAVE Plan adjusts your monthly payment amount to make sure it is affordable for your income and family size and comes with other new benefits.

After you complete the repayment period for each IDR plan, your remaining balance is forgiven.

Comparing Income-Driven Repayment (IDR) Plans

Repayment Plan Monthly Payment Amount (Percentage of Discretionary Income Divided by 12) Loan Forgiveness Time Frame 2024 Changes
Saving on a Valuable Education (SAVE) Plan 10% of discretionary income (dropping to 5% for undergraduate loans starting next July) After 20 years, if all loans being repaid on the SAVE Plan were received for undergraduate study

After 25 years, if any loans being repaid under the SAVE Plan were received for graduate or professional study
February 2024
Borrowers with initial loan balances of $12,000 or less will be eligible for IDR forgiveness after 10 years of repayment. For each $1,000 of initial loan balance above $12,000, the forgiveness timeframe increases by 1 year up to 20 years max for borrowers with only undergraduate-level loans and 25 years max for borrowers with any graduate-level loans.

Starting in July 2024
Payments will be cut in half for borrowers with only undergrad student loans. Borrowers with both grad and undergrad loans will also have more affordable payments.
Income-Based Repayment (IBR) Plan 15% of discretionary income (10% for new borrowers)

The monthly payment will never be more than the amount you would pay under the 10-year Standard Repayment Plan
After 25 years (20 years for new borrowers) in repayment Remains available, but you can’t enroll in IBR once you’ve made 60 or more payments on the SAVE Plan after July 1, 2024

Defaulted loans will be eligible for the IBR Plan after July 1, 2024
Pay As You Earn (PAYE) Repayment Plan 10% of discretionary income

The monthly payment will never be more than the amount you would pay under the 10-year Standard Repayment Plan
After 20 years in repayment Remains available if you’re already enrolled in the PAYE Plan

No new enrollments after July 1, 2024

If you leave the PAYE Plan after July 1, 2024, you can’t reenroll
Income-Contingent Repayment (ICR) Plan The lesser of 20% of discretionary income or a monthly payment on a 12-year fixed plan, adjusted based on your income After 25 years in repayment Remains available if you’re already enrolled in the ICR Plan

After July 1, 2024, you can’t enroll unless you have a Direct Consolidation Loan that includes a parent PLUS loan

Note: If an IDR plan doesn’t meet your repayment goals, there are other repayment plans available.

2

Am I eligible for an IDR plan?

Most federal student loans are eligible for at least one IDR plan. Review the specific eligibility requirements to see which plan(s) you qualify for. Keep in mind that your loan type can affect your eligibility for each IDR plan. Log in to StudentAid.gov and visit your Dashboard to check your loan type(s). In some cases, you might need to consolidate your student loans to be able to repay the loan under a specific plan.

Defaulted loans are not eligible for any IDR plans. Learn how to get out of default.

While Direct PLUS Loans for parents and Federal Family Education Loan (FFEL) Program PLUS Loans for parents are not eligible for any of the IDR plans, parent PLUS loan borrowers do have the option to consolidate their Direct PLUS Loans and FFEL PLUS Loans into a Direct Consolidation Loan. Doing so would make them eligible for the ICR Plan.

Eligible Loans for an Income-Driven Repayment (IDR) Plan

Loan TypeSAVE PlanPAYE PlanIBR PlanICR Plan
Direct Subsidized LoansEligibleEligibleEligibleEligible
Direct Unsubsidized LoansEligibleEligibleEligibleEligible
Direct PLUS Loans for graduate or professional studentsEligibleEligibleEligibleEligible
Direct PLUS Loans for parentsNot EligibleNot EligibleNot EligibleEligible if Consolidated*
Direct Consolidation Loans that don’t include a Direct PLUS Loan for parentsEligibleEligibleEligibleEligible
Direct Consolidation Loans that do include a Direct PLUS Loan for parentsNot EligibleNot EligibleNot EligibleEligible
Subsidized Federal Stafford Loans (from the FFEL Program**)Eligible if Consolidated*Eligible if Consolidated*EligibleEligible if Consolidated*
Unsubsidized Federal Stafford Loans (from the FFEL Program**)Eligible if Consolidated*Eligible if Consolidated*EligibleEligible if Consolidated*
FFEL PLUS Loans made to graduate or professional studentEligible if Consolidated*Eligible if Consolidated*EligibleEligible if Consolidated*
FFEL PLUS Loans made to parentsNot EligibleNot EligibleNot EligibleEligible if Consolidated*
FFEL Consolidation Loans that don’t include a Direct PLUS Loan for parentsEligible if Consolidated*Eligible if Consolidated*EligibleEligible if Consolidated*
FFEL Consolidation Loans that do include a Direct PLUS Loan for parentsNot EligibleNot EligibleNot EligibleEligible if Consolidated*
Federal Perkins LoansEligible if Consolidated*Eligible if Consolidated*Eligible if Consolidated*Eligible if Consolidated*

*Must be consolidated into a Direct Consolidation Loan
**Federal Family Education Loan (FFEL) Program

3

How can I compare repayment plan options?

You can use Loan Simulator to see how your loan repayment would change under different repayment plans. Loan Simulator can help you estimate your

  • monthly payment amount,
  • repayment period,
  • projected loan forgiveness, and
  • total amount you’ll pay over the life of your loan.

Loan Simulator will ask for basic information about your income, family size, tax filing status, and state of residence, then present different plan options for you to review.

Loan Simulator allows you to directly compare the monthly payments and estimated total you’d pay on up to three repayment plans at a time.

For more information and tips about using the student loan payment calculator, watch our tutorial video: Use Loan Simulator To Find the Right Repayment Plan for You.

4

What are the pros and cons of IDR plans?

There are pros and cons to being on an IDR plan. Below we’ve listed some of the more significant items to note.

ProsCons
  • On the SAVE Plan, a government interest subsidy is available for borrowers with monthly payments lower than their accrued monthly interest.
  • If your income goes down or your family size goes up, your monthly payment amount could go down.
  • Payments made on an IDR plan count towards IDR loan forgiveness and could count toward Public Service Loan Forgiveness (PSLF) (if you meet other PSLF requirements).
  • Some IDR plans could have you pay more interest over time. More interest builds up when you have smaller payments over a longer repayment period.
  • If your income goes up or your family size goes down, your monthly payment amount could increase.
  • You might be required to pay state, not federal, income tax on any forgiven amount if you still have a balance at the end of your repayment period.

Loan servicers manage your loans and are a helpful resource if you have any questions. Contact your loan servicer to learn more about your available repayment plan options.

5

I’m ready to apply. Now what?

The free application process starts with submitting an IDR Plan Request. Please note: You must first log in to your StudentAid.gov account to access the application.

The online IDR Plan Application provides information for new applicants first, but it also has options for people who are already on an IDR plan.

You will have the option to either

  • import your financial information or
  • upload proof of income for your servicer to enroll you in the plan with the lowest monthly payment.

Along with your application, you’ll need to provide income information. The easiest way to do this is by providing consent for us to securely access your federal financial information, which is an option within the IDR application. Alternatively, you can provide documentation, such as your most recent tax return. If you didn’t file taxes, other acceptable income information can include pay stubs or a letter from your employer.

After you submit your application, it will be processed over the next few weeks.

6

What if my income or family size changes but I’m already enrolled in an IDR plan?

If your IDR plan’s monthly payment amount doesn’t reflect your current situation (for example, you were recently laid off or your family size has increased), you can submit updated information to request that your monthly payment is recalculated.

There are two ways to submit additional information to support your request:

  1. Submit a new application for an IDR plan at StudentAid.gov/idr. When asked to select the reason for submitting the application, state that you are submitting documentation because you want your servicer to recalculate your payment. Be sure to include all required documentation to avoid delays (see below).
  2. Submit additional documentation to your servicer directly online though their website.

Income Documentation Requirements

  • Any pay stubs or letters from your employer listing your gross pay should also include how often you receive that income, for example, “twice per month” or “every other week.”
  • You must provide at least one piece of documentation for each source of taxable income.
  • The date of any supporting documentation you provide must be no older than 90 days from the date you sign this form.
  • Copies of documentation are acceptable.

7

When am I required to recertify my income for my IDR plan?

You’re required to recertify your income or family size once per year. But if you apply for an IDR plan and provide consent for us to securely access your federal financial information, we will work with your loan servicer to automatically recertify your IDR plan each year. You’ll be notified of any changes each year, and you’ll always be able to manually recertify if you wish. You can manually recertify online.

Learn more about managing your loans and explore options to help make your federal student loan repayments a little less stressful.

You never have to pay for help with your federal student loans. If you have questions about managing your loans, contact your loan servicer for free help. And make sure to avoid student aid scams.