Owe more in student loans than you can realistically pay back? The federal government has repayment plans that base your monthly payment on your income instead.
Income-driven repayment — IDR — is a category of federal student loan repayment plans that calculate your monthly payment as a percentage of what you earn rather than a fixed payment based on your loan balance. If your income is low, your payment is low. If your income is low enough, your payment can be zero. Any balance remaining after a set number of years of qualifying payments is forgiven.
These plans exist specifically for people whose loan balance, on a federal loan only (not private) is out of proportion to their income — someone who borrowed $60,000 and is earning $35,000, or a person working in a lower-paying field who could not realistically make the payments a standard repayment schedule would require. This page explains how the plans currently available work, what the real costs look like over time, and how to apply.
If you need to pause payments entirely because of job loss, a medical situation, or acute financial hardship, that is a different set of options — covered on the student loan deferment and forbearance page. For people working in government or nonprofit jobs, combining IDR with Public Service Loan Forgiveness is often a better path than IDR alone — that is covered on the PSLF page.
- NOTE: The interaction between IDR plan choice, forgiveness timeline, PSLF eligibility, and the tax treatment of forgiveness is genuinely complicated. Nonprofit credit counseling agencies that handle student debt are listed at the national and state directory of nonprofit credit counselors - many work on a sliding scale or at no cost. For federal loan questions directly, the Department of Education's helpline is 1-800-872-5327 or the Federal Student Aid Information Center (FSAIC) at 800-433-3243.
How your monthly payment is calculated
Every IDR plan calculates your payment based on your discretionary income — the difference between what you earn and a percentage of the federal poverty guideline for your family size. Under the current Income-Based Repayment plan, that threshold is 150 percent of the poverty guideline. If your income is at or below that level, your calculated payment is zero. Above it, you pay a percentage of the difference.
Depending on when you first borrowed, that percentage is either 10 or 15 percent under IBR — more on that distinction below. The payment is recalculated each year when you recertify your income. If your income goes up, your payment goes up. If it drops, so does your payment.
The federal Loan Simulator at https://studentaid.gov/loan-simulator/ lets you enter your actual income, family size, and loan balance and see estimated monthly payments under each plan available to you. That tool is the right first step before making any decisions about which plan to enroll in.
The plans currently available
Income-Based Repayment (IBR) is the most stable option for existing borrowers and the one most people should consider first. It comes in two versions based on when you first borrowed.
- If your first federal loan was disbursed before July 1, 2014, your payment is 15 percent of your discretionary income and any remaining balance is forgiven after 25 years of qualifying payments.
- If your first loan was on or after July 1, 2014, your payment is 10 percent of discretionary income and forgiveness comes after 20 years.
Both versions cap your monthly payment at what you would pay under a standard 10-year repayment plan — so if your income rises significantly, your payment will not exceed the standard amount. IBR is open to any borrower with eligible federal loans and has no income cutoff. FFEL loans qualify for IBR directly, without needing to consolidate first. Parent PLUS loans do not qualify for IBR.
The Repayment Assistance Plan (RAP) is a new plan launching July 1, 2026. For borrowers whose first federal loan was disbursed on or after that date, RAP will be the only income-driven option available. Existing borrowers can also choose to switch to RAP when it becomes available. Under RAP, payments are set at 1 to 10 percent of your adjusted gross income depending on your loan balance, and any remaining balance is forgiven after 30 years. RAP counts toward Public Service Loan Forgiveness. Details on how to enroll will be at https://studentaid.gov/manage-loans/repayment/plans when the plan opens.
Two older plans — PAYE and ICR — remain available to eligible existing borrowers through July 2028, when they will be eliminated. If you are currently enrolled in either and your payments and forgiveness credit are processing normally, you can remain on them until the sunset date. Most borrowers choosing a plan for the first time should look at IBR now and RAP once it is available, rather than enrolling in a plan that is winding down.
The SAVE plan also no longer exists. Borrowers who were enrolled in SAVE are no longer earning qualifying payment credit and need to move to a different plan. If your loans were in SAVE forbearance, contact your servicer or go to studentaid.gov to switch plans.
What happens to interest under IDR
This is the part many borrowers do not fully understand going in, and it matters. Under income-driven repayment, your required monthly payment may be less — sometimes significantly less — than the interest accruing on your loan each month. When that happens, your balance grows even as you make every required payment. After 20, 25, or 30 years of qualifying payments, the remaining balance — including that grown interest — is forgiven. But your balance at the time of forgiveness may be larger than what you originally borrowed.
IBR includes a limited interest subsidy for subsidized loans in the first three years of the plan: if your payment does not cover the interest accruing, the government waives the unpaid subsidized interest during that period. After three years, that subsidy ends and interest grows on all loan types. Understanding this going in is important — IDR is not a way to gradually pay down your loans on a lower budget. For most borrowers with high debt relative to income, it is a way to keep payments manageable while working toward eventual forgiveness.
The forgiveness timeline — and the tax issue
After the required number of years of qualifying payments, whatever balance remains is forgiven. Under IBR that is 20 or 25 years depending on when you first borrowed. Under RAP it is 30 years. Under Public Service Loan Forgiveness it is 10 years for borrowers who qualify — which is why PSLF combined with IDR is often the better path for government and nonprofit workers.
IDR forgiveness is treated as taxable income at the federal level. If you reach the end of your repayment period and have a large balance forgiven, that amount is added to your taxable income for that year, which can create a substantial tax bill. PSLF forgiveness is permanently exempt from federal taxes. Borrowers with many years remaining before IDR forgiveness have time to plan around this, but it is worth knowing the tax treatment now rather than being surprised later.
Which loans are eligible
IDR plans apply to federal student loans only — not private loans. Among federal loans, most Direct Loans qualify. FFEL loans qualify for IBR directly. Perkins Loans need to be consolidated into a Direct Consolidation Loan first to access most IDR plans. Parent PLUS loans do not qualify for IBR. The one income-driven option for Parent PLUS loans is ICR, but only if the loans are consolidated into a Direct Consolidation Loan before June 30, 2026, and enrolled in ICR before July 2028. After those deadlines, Parent PLUS borrowers who did not consolidate in time will not have access to any income-driven plan. If you have Parent PLUS loans and are concerned about this deadline, contact your servicer immediately.
If you are not sure what type of federal loans you have, log in at https://studentaid.gov/ using your FSA ID — your loan types, balances, and current servicer are all listed there.
How to apply
Start with the Loan Simulator at https://studentaid.gov/loan-simulator/ to see what your payment would be under each plan available to you, and how much you would pay in total over the life of the loan under different scenarios. Once you have decided which plan makes sense, you apply through your loan servicer. You will need to provide income documentation — typically your most recent federal tax return or current pay stubs if your income has changed significantly since you last filed. If your income dropped recently, using current pay stubs rather than last year's return will give you a lower payment.
You must recertify your income every year to remain on an IDR plan. If you miss recertification, your servicer will move you to a standard repayment schedule and your payment will increase significantly. Set a reminder well before your recertification deadline — servicers are required to notify you, but it is easy to miss.
Federal student loan repayment plans, eligibility rules, payment formulas, and forgiveness terms are subject to change through legislation, regulation, and court decisions. The IDR landscape has changed significantly and continues to evolve. Verify current plan availability, payment terms, and enrollment procedures at studentaid.gov or through your loan servicer before making repayment decisions. Nothing on this page constitutes legal or financial advice.
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