Income-Based Repayment (IBR)

IBR is a repayment option based on income and family size. For most, IBR payments will be less than 10% of your income. IBR will also forgive any remaining debt after 25 years of qualifying payments, although the Internal Revenue Service does treat any forgiven loan amount as taxable income.

Key features of IBR:

• IBR is available to Direct Loan Program and FFEL Program borrowers
• You must apply for IBR each year you participate
• You must demonstrate Partial Financial Hardship
• Monthly IBR payments are based on income, family size and the poverty line for your state
• There is no minimum payment
• Payments do not have to cover interest
• The government may pay accruing interest for your first 3 years of IBR
• Loans may be forgiven for Direct Loan Program borrowers after 10 years for those who work in public service or other qualifying careers
• Loans may be forgiven after 25 years for all borrowers

To see if you qualify for IBR, use our Income-based repayment calculator.

Income-Sensitive Repayment (ISR)

This program may be a good option if you have Stafford, PLUS or Grad PLUS loans under the FFEL Program and want to lower your payments for a relatively brief period of time. With an ISR plan, your lender determines your monthly payment based on your adjusted gross income and will readjust your payments annually based on your reported earnings.

Key features of ISR:

• Your monthly loan payment is based on your annual income
• As your income increases or decreases, so do your payments
• The maximum repayment period is 10 years
• You must reapply for income-sensitive repayment each year
• Ask your lender for more information on FFEL income-sensitive repayment plans
• ISR is available for FFEL Program Stafford loan, PLUS and Grad PLUS loan borrowers

ISR can help you stay current with your payments if you’re facing an income shortfall; but if you think you’ll need lower payments for more than a year, you may want to consider extended or graduated repayment. 

Income-Contingent Repayment (ICR)

With ICR, monthly payments are calculated based on your income, family size, and the total amount borrowed.

If you stay with the ICR plan for 25 years, any remaining debt will be forgiven, although the Internal Revenue Service does treat any forgiven loan amount as taxable income.

Key features of ICR:

• ICR is available for Direct Loan Program borrowers of Stafford loans and Grad PLUS loans
• Payments are based on income, family size and total student loan debt
• The payment amount adjusts annually based on your adjusted gross income
• Payments do not have to cover interest, but unpaid interest does accrue
• Accrued interest caps at 10% of the original loan amount
• The federal government subsidizes interest beyond the 10% cap
• If you pay the loan early or switch plans, all accrued
  interest—including federally subsidized interest—is added to the principal
• The maximum loan term is 25 years
• After 25 years the remaining debt is forgiven
• Forgiven debt may be treated as taxable income

If you plan to pay your loans off early or switch to a different plan, ICR is probably not right for you, because you will be responsible for all the unpaid interest.