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What Is Income Driven Repayment?
Income driven repayment (IDR) plans cap your federal student loan monthly payment at a percentage of your "discretionary income" — typically 5% to 20%, depending on the plan. After 20-25 years of qualifying payments, any remaining balance is forgiven.
Key IDR Benefits:
- • Monthly payments based on income, not loan balance
- • Payments can be as low as $0/month for low incomes
- • Loan forgiveness after 20-25 years of payments
- • Undergraduate loans forgiven after just 10 years on SAVE Plan (if original balance was $12,000 or less)
- • Interest subsidy — unpaid interest doesn't accumulate on most plans
How Discretionary Income Is Calculated
Discretionary income = Your AGI (Adjusted Gross Income) minus a percentage of the Federal Poverty Guideline for your family size and state.
Example Calculation (2026)
Single borrower in contiguous 48 states:
The 4 IDR Plans Compared (2026)
| Plan | Payment % | Forgiveness | Best For |
|---|---|---|---|
| SAVE Plan | 5-10% | 10-25 years | ✅ Best for most borrowers |
| PAYE Plan | 10% | 20 years | High earners relative to debt |
| IBR Plan | 10-15% | 20-25 years | Older FFEL loans |
| ICR Plan | 20% | 25 years | Parent PLUS loans only |
SAVE Plan (Saving on a Valuable Education)
The SAVE Plan is the newest and most generous IDR plan, introduced in 2023. It offers the lowest monthly payments for most borrowers.
SAVE Plan Key Features
- Payment: 5% of discretionary income for undergraduate loans, 10% for graduate loans (weighted average if you have both)
- Discretionary income: AGI minus 225% of poverty guideline (more generous than other plans)
- Interest subsidy: If your payment doesn't cover interest, the unpaid portion is waived (doesn't capitalize)
- $0 payment floor: If 5% of your discretionary income is $0, your payment is $0
- Fast forgiveness: Undergraduate loans forgiven after 10 years if original balance was $12,000 or less (add 1 year per additional $1,000 borrowed)
- Standard forgiveness: 20 years if original balance was $12,000 or less and all loans were undergraduate; 25 years otherwise
SAVE Plan Payment Examples (2026):
Single borrower, $40,000 income:
~$69/month (undergraduate), ~$138/month (graduate)
Single borrower, $30,000 income:
$0/month (below 225% poverty line)
Married borrower (family of 4), $60,000 income:
$0/month (below 225% poverty line for family of 4)
PAYE Plan (Pay As You Earn)
PAYE was the most popular IDR plan before SAVE. It's still a good option for some borrowers.
PAYE Plan Key Features
- Payment: 10% of discretionary income
- Discretionary income: AGI minus 150% of poverty guideline
- Payment cap: Never more than the 10-year Standard Plan amount
- Interest subsidy: First 3 years of unpaid interest is subsidized for subsidized loans
- Forgiveness: 20 years of qualifying payments
- Eligibility: Must be a new borrower as of Oct. 1, 2007; must have received a disbursement on or after Oct. 1, 2011
PAYE vs. SAVE: Which Is Better?
SAVE is generally better because:
- Lower payment percentage (5% vs. 10%)
- Higher poverty guideline multiplier (225% vs. 150%)
- More generous interest subsidy
- Faster forgiveness for some borrowers
However, PAYE may be better if you have high income relative to debt (due to the payment cap).
IBR Plan (Income-Based Repayment)
IBR was the first IDR plan and is now mostly for borrowers with older FFEL loans who don't qualify for PAYE or SAVE.
IBR Plan Key Features
- Payment for new borrowers (after July 1, 2014): 10% of discretionary income
- Payment for older borrowers: 15% of discretionary income
- Discretionary income: AGI minus 150% of poverty guideline
- Payment cap: Never more than the 10-year Standard Plan amount
- Forgiveness: 20 years for new borrowers, 25 years for older borrowers
- Eligibility: Must demonstrate partial financial hardship (IDR payment less than Standard Plan)
ICR Plan (Income-Contingent Repayment)
ICR is the least generous IDR plan but has one unique advantage: it's the only IDR plan available for Parent PLUS loans.
ICR Plan Key Features
- Payment: 20% of discretionary income OR the amount you'd pay on a fixed 12-year plan, whichever is less
- Discretionary income: AGI minus 100% of poverty guideline (least generous)
- Forgiveness: 25 years of qualifying payments
- Eligibility: All Direct Loan borrowers qualify (including Parent PLUS through consolidation)
ICR for Parent PLUS Loans
If you have Parent PLUS loans and want IDR, you must:
- Consolidate your Parent PLUS loans into a Direct Consolidation Loan
- Select ICR as your repayment plan
- Make 25 years of qualifying payments for forgiveness
Note: There's a loophole — consolidating Parent PLUS loans with your own student loans and enrolling in SAVE may get you on a better plan. Consult a student loan attorney for "double consolidation" strategies.
Which IDR Plan Is Right for You?
IDR Plan Selection Guide
You have only undergraduate loans:
→ Choose SAVE Plan (lowest payment at 5%)
You have graduate school loans:
→ Choose SAVE Plan (10% but best interest subsidy)
You have Parent PLUS loans:
→ Choose ICR Plan (only option after consolidation)
You have older FFEL loans:
→ Consolidate to Direct Loans, then choose SAVE or IBR
Your income is high relative to debt:
→ Compare PAYE and SAVE (PAYE's payment cap may help)
You want fastest possible forgiveness:
→ SAVE Plan (10 years for small undergraduate balances)
How to Apply for Income Driven Repayment
Gather required information
You'll need: Social Security number, driver's license, recent pay stub or tax return, contact info for your employer, and details about your family size.
Go to StudentAid.gov
Visit StudentAid.gov/apply-for-income-driven-repayment — this is the official government site.
Log in with your FSA ID
Use the same username/password you use for your student aid account. Forgot it? Reset at fsaid.ed.gov.
Complete the IDR application
The application takes 10-15 minutes. You can request income information directly from the IRS (fastest) or upload documentation manually.
Select your preferred plan
You can select a specific plan OR choose "I'm not sure" and let the servicer auto-assign you to the plan with the lowest payment.
Sign and submit
Review your application, sign electronically, and submit. Your servicer will process it in 5-10 business days.
Important:
While your IDR application is being processed, KEEP MAKING YOUR REGULAR PAYMENTS. If you stop paying and your application is denied or delayed, you could go into delinquency.
Annual Recertification Requirements
IDR plans require you to recertify your income and family size every 12 months. Here's what to know:
Recertification Timeline
- When: Due 12 months from your last certification date (not when you file taxes)
- Reminder: Your servicer should send reminders 30-60 days before due date
- Grace period: You have a 10-day grace period after the due date
What Happens If You Don't Recertify?
- You're removed from the IDR plan
- Your payment reverts to the Standard 10-year amount (often much higher)
- Unpaid interest may capitalize (be added to your principal)
- You lose progress toward forgiveness for that year
How to Recertify
The process is the same as your initial application: log into StudentAid.gov, update your income and family size, and resubmit. It takes about 5 minutes if nothing has changed.
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Get Free Debt Help →Frequently Asked Questions
What is an income driven repayment plan?
Income driven repayment (IDR) plans cap your federal student loan payment at a percentage of your discretionary income (5-20% depending on the plan). After 20-25 years of qualifying payments, any remaining balance is forgiven. IDR plans can reduce payments to as low as $0/month for low-income borrowers.
What are the 4 income driven repayment plans?
The four IDR plans are: (1) SAVE Plan — 5-10% of discretionary income, best for most borrowers. (2) PAYE Plan — 10% of discretionary income, capped at 10-year Standard Plan amount. (3) IBR Plan — 10-15% of discretionary income. (4) ICR Plan — 20% of discretionary income or fixed payment over 12 years. Only ICR is available for Parent PLUS loans.
How do I apply for income driven repayment?
Apply at StudentAid.gov/aid-estimator or through your loan servicer. You'll need: income documentation (tax return or pay stubs), family size information, and details about your loans. The application takes 10-15 minutes and you can apply even if you're not behind on payments.
Is income driven repayment forgiveness taxable?
Currently, student loan forgiveness through IDR plans is NOT taxed as income through December 31, 2025, thanks to the American Rescue Plan. After 2025, the tax treatment depends on whether Congress extends this provision. Some states may still tax forgiven amounts.
What if my income changes during the year?
If your income drops significantly (job loss, reduced hours, etc.), you can request a "Change in Repayment Plan" at any time — you don't have to wait for annual recertification. Your payment will be recalculated based on your current income.