Loan Repayment Assistance
As of January 2024, there are five main federal Income-Driven Repayment (IDR) plans available for borrowers with federal student loans. These plans are designed to make loan repayment more manageable based on the borrower's income and family size. Here's a brief summary of the current federal IDR plans:
Saving on a Valuable Education (#SAVE)
The Saving on a Valuable Education (SAVE) Plan is the newest income-driven repayment (IDR) plan. Like other IDR plans, the SAVE Plan calculates your monthly payment amount based on your income and family size. In addition, the SAVE Plan has unique benefits that will lower payments for many borrowers.
The SAVE Plan replaced the Revised Pay As You Earn (REPAYE) Plan. Borrowers on the REPAYE Plan automatically get the benefits of the new SAVE Plan.
Pay as You Earn (#PAYE)
PAYE sets monthly payments at 10% of discretionary income but will never exceed the 10-year Standard Repayment Plan amount. Forgiveness is granted after 20 years of qualifying payments.
To qualify for PAYE your monthly payment must be less than what you would pay under the Standard Repayment Plan with a 10-year repayment period. If your payment would be more under the Standard Plan, you wouldn’t benefit from the PAYE Plan. That’s because you’d end up paying off your loan before you’d be able to get IDR plan forgiveness.
To qualify for the PAYE Plan you must be a new borrower. This means that you must have had no outstanding balance on a Direct Loan or FFEL Program loan when you received a Direct Loan or FFEL Program loan on or after Oct. 1, 2007, and you must have received a disbursement of a Direct Loan on or after Oct. 1, 2011.
*Partial Financial Hardship is required.
New Income-Based Repayment (#New IBR)
New Income-Based Repayment (#NewIBR)
New IBR sets monthly payments at 10% of discretionary income but will never exceed the 10-year Standard Repayment Plan amount. Forgiveness is granted after 20 years of qualifying payments.
To qualify for New IBR your monthly payment must be less than what you would pay under the Standard Repayment Plan with a 10-year repayment period. If your payment would be more under the Standard Plan, you wouldn’t benefit from the New IBR plan. That’s because you’d end up paying off your loan before you’d be able to get IDR plan forgiveness.
This plan is set to replace PAYE by the end of summer of 2025.
*Partial Financial Hardship is required
Old Income-Based Repayment (#OldIBR)
Borrowers on Old Income-Based Repayment "Old IBR" pay 15% of their household discretionary income if they are new borrowers if they are not new borrowers on or after July 1, 2014. The repayment term is 20 or 25 years, depending on when the loans were first disbursed and whether or not they're undergraduate vs graduate loans.
Income-Contingent Repayment (#ICR)
Income-Contingent Repayment "ICR" is the #OG of IDR plans and calculates payments based on the lesser of 20% of household discretionary income or the amount the borrower would pay on a fixed 12-year plan. Forgiveness is granted after 25 years of payments.
Borrowers must recertify their income and family size annually to stay on these plans. After the repayment period, any remaining balance may be forgiven, but the forgiven amount may be considered taxable income. It's crucial for borrowers to stay informed about any updates or changes to these plans by checking with the U.S. Department of Education or their loan servicer.