Income-driven repayment (IDR) plans cap your federal student loan payment at a percentage of what you earn — not what you owe. For borrowers with high debt or low income relative to their balance, IDR plans can cut monthly payments by hundreds of dollars and provide a path to forgiveness after 20–25 years.
IDR Plan Comparison at a Glance
| Plan | Payment | Forgiveness | Who Qualifies | Status (2026) |
|---|---|---|---|---|
| SAVE | 5% undergrad / 10% grad | 10–25 yrs (varies by balance) | All new/existing borrowers | In litigation; borrowers in interest-free forbearance |
| PAYE | 10% | 20 years | Borrowed on/after 10/1/2007; new borrower as of 10/1/2011 | Closed to new enrollees (2023) |
| IBR (new) | 10% | 20 years | Borrowed on/after 7/1/2014 | Open |
| IBR (old) | 15% | 25 years | Borrowed before 7/1/2014 | Open |
| ICR | 20% or fixed 12-yr payment (lesser) | 25 years | All Direct loan borrowers | Open |
Discretionary income = AGI minus 150% of federal poverty guideline (SAVE uses 225%).
How Each Plan Works
SAVE (Saving on a Valuable Education)
The newest IDR plan, launched in 2023. SAVE uses 225% of the poverty line as the income exemption (vs. 150% for older plans) — meaning more of your income is protected before payments kick in.
Key features:
- 5% of discretionary income for undergrad loans; 10% for grad loans; blended percentage for both
- Government covers any unpaid monthly interest (balance never grows while on SAVE)
- Forgiveness in 10 years for borrowers with original balances ≤ $12,000 (10 additional years per $1,000 above that, up to 20–25 years)
- 2026 status: Blocked by 8th Circuit Court. Affected borrowers are in interest-free administrative forbearance while legal challenges proceed.
PAYE (Pay As You Earn)
Closed to new applications as of July 2023 under the final IDR rule. Existing PAYE enrollees remain on the plan.
- 10% of discretionary income
- 20-year forgiveness
- Eligible only for borrowers who took out their first Direct loan on or after October 1, 2007, and were new borrowers as of October 1, 2011
IBR (Income-Based Repayment)
The most widely available IDR plan — open to all Direct loan borrowers. Two versions exist based on when you first borrowed:
| IBR New | IBR Old | |
|---|---|---|
| First loan date | On/after 7/1/2014 | Before 7/1/2014 |
| Payment | 10% | 15% |
| Forgiveness | 20 years | 25 years |
| Interest subsidy | Partial (3 yrs subsidized) | Partial (3 yrs subsidized) |
ICR (Income-Contingent Repayment)
The oldest IDR plan — and generally least favorable. Payment is the lesser of:
- 20% of discretionary income, OR
- Fixed payment over 12 years, adjusted for income
25-year forgiveness. ICR is the only IDR option for Parent PLUS loans (after consolidation into a Direct Consolidation Loan).
Monthly Payment Examples by Income
Assumptions: Single borrower, no dependents, lives in contiguous US. 2026 federal poverty guideline: $15,650 (single).
$40,000 AGI
| Plan | Discretionary Income | Monthly Payment |
|---|---|---|
| SAVE | $40,000 − (225% × $15,650) = $4,787 | $20–$40 |
| IBR New | $40,000 − (150% × $15,650) = $16,525 | $138 |
| IBR Old | $40,000 − (150% × $15,650) = $16,525 | $207 |
| ICR | $40,000 − (100% × $15,650) = $24,350 | $406 |
$65,000 AGI
| Plan | Discretionary Income | Monthly Payment |
|---|---|---|
| SAVE | $65,000 − (225% × $15,650) = $29,787 | $124–$248 |
| IBR New | $65,000 − (150% × $15,650) = $41,525 | $346 |
| IBR Old | $65,000 − (150% × $15,650) = $41,525 | $519 |
| ICR | $65,000 − (100% × $15,650) = $49,350 | $822 |
$90,000 AGI
| Plan | Discretionary Income | Monthly Payment |
|---|---|---|
| SAVE | $90,000 − (225% × $15,650) = $54,787 | $228–$457 |
| IBR New | $90,000 − (150% × $15,650) = $66,525 | $554 |
| IBR Old | $90,000 − (150% × $15,650) = $66,525 | $831 |
| Standard 10-yr | N/A (balance-based) | $1,000+ |
Payment examples use 2026 estimated poverty guidelines. Actual payments depend on your specific family size and AGI — use the Loan Simulator at studentaid.gov for precise calculations.
Which IDR Plan Should You Choose?
| Your Situation | Best Plan |
|---|---|
| Pursuing PSLF (10-year forgiveness) | IBR New (or SAVE if it resumes) — lowest payment = less paid before forgiveness |
| High debt relative to income, not pursuing PSLF | IBR New — 20-year forgiveness, 10% cap |
| Borrowed before July 2014 | IBR Old is likely your only non-ICR option |
| Parent PLUS loans | ICR (after consolidation) — only IDR option |
| Income will grow significantly (e.g., medical resident) | IBR New during residency; consider refinancing later |
Annual Recertification
IDR plans require annual income recertification. If you miss your recertification deadline:
- Payments revert to the standard 10-year amount (which can be much higher)
- Unpaid interest may capitalize
- Set a calendar reminder 60–90 days before your deadline
Recertify at StudentAid.gov even if your income hasn’t changed.
IDR Forgiveness and Taxes
Forgiveness under IBR and ICR after 20–25 years is currently treated as taxable income at the federal level (the forgiven amount is counted as income in the forgiveness year). State tax treatment varies.
Exception: PSLF forgiveness (after 120 qualifying payments) is tax-free.
Planning tip: If you’ll receive IDR forgiveness in 20+ years, work with a tax professional as the forgiveness date approaches to plan for the tax bill.
How to Enroll
- Log in to StudentAid.gov with your FSA ID
- Go to “Repayment Plans” → “Apply for Income-Driven Repayment”
- Choose your plan (or let the system recommend the lowest-payment option)
- Provide income documentation (IRS Data Retrieval Tool or manual upload)
- Confirm family size
- Servicer processes in 2–4 weeks; payments adjust on next billing cycle
Related Guides
- Student Loan Repayment Guide
- How to Apply for PSLF
- Student Loan Forgiveness Guide
- Student Loan Deferment and Forbearance
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