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Make payments based on what you can afford
Income-dependent payment plans allow you to adjust your payments based on factors such as your income, family size and the poverty level in your area.
Under the federal student loan program, there are three possible options for repaying your student loan based on your income:
- Income-Based Repayment (IBR): lower payments and loan forgiveness
- Income-Sensitive Repayment (ISR): for FFEL Program borrowers
- Income-Contingent Repayment (ICR): for Direct Loan Program borrowers
If you are interested in an income-dependent payment plan, give us a call. Our experienced student loan counselors can help you find out if you qualify and then assist you to apply.
Income-Based Repayment (IBR)
IBR is a repayment plan based on income and family size. For most, IBR payments will be less than 10% of your income. Income and family size are reviewed annually to determine if your payment amount should be adjusted. Under this plan, any remaining debt after 25 years of making payments is forgiven, although the Internal Revenue Service does treat any forgiven loan amount as taxable income.
Use our Income-Based Repayment (IBR) calculator to get an idea of whether you qualify and what your payment amount would be.
Income-Sensitive Repayment (ISR)
This program may be a good option if you have Stafford loans under the FFEL Program and want to lower your payments for a 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. To find out if you have FFEL Program loans, go to the National Student Loan Data System (NSLDS), the central database for federal student loan information.
ISR can help you stay current with your payments if you expect to earn less in the coming months; 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)
This plan is available if you borrowed Stafford loans under the Direct Loan Program. 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. If you plan to pay off your loans early or switch to a different plan, ICR is probably not right for you, because you will be responsible for all the unpaid interest.
To find out if you have Direct Loan Program loans, go to the National Student Loan Data System (NSLDS), the central database for federal student loan information.
