Income-Driven Repayment Plans: A Complete How-To Guide

What Are Income-Driven Repayment (IDR) Plans?

Income-driven repayment (IDR) plans are federal student loan repayment options that calculate your monthly payment based on your income and family size, rather than the total amount you owe. This design can make payments more affordable, especially when your income is low relative to your debt. IDR plans typically extend your repayment term and can result in forgiveness of any remaining balance after a set period of qualifying payments.

These plans stand in contrast to fixed-payment plans, such as the 10-year Standard Repayment Plan, where your monthly amount is set to ensure you pay off the loan within a specific timeframe. Because IDR payments are tied to income, they adjust as your financial situation changes, but you must recertify your income and family size each year to stay on the plan.

Sources: Federal Student Aid (U.S. Department of Education), Student Loan Borrower Assistance (SLBA)

Overview of Available IDR Plans (Current as of 2026)

The landscape of income-driven repayment changed significantly in 2026. As of July 1, 2026, a new plan called the Repayment Assistance Plan (RAP) became available for loans disbursed on or after that date. For many borrowers, RAP is now the only IDR option they can choose. The previously popular SAVE Plan was ended by a court order on March 10, 2026, and is no longer available. The older plans—Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR)—are being phased out and will end by July 1, 2028. Income-Based Repayment (IBR) remains available to eligible borrowers who have not received a new federal loan disbursed on or after July 1, 2026.

• Repayment Assistance Plan (RAP): Available for loans disbursed on or after July 1, 2026; the only IDR option for new borrowers.
• Income-Based Repayment (IBR): Remains available for loans disbursed before July 1, 2026, for borrowers without new loans after that date.
• Pay As You Earn (PAYE): Being phased out; ends July 1, 2028.
• Income-Contingent Repayment (ICR): Being phased out; ends July 1, 2028.
• SAVE Plan: No longer available after a court order on March 10, 2026.

Sources: Federal Student Aid (U.S. Department of Education), Edfinancial Services (Federal Student Aid servicer), U.S. Department of Education, Student Loan Borrower Assistance (SLBA), Credible

How Your Payment Is Calculated Under Each Plan

Each IDR plan uses a distinct formula to determine your monthly payment, often based on adjusted gross income (AGI) and family size. The exact calculation can differ, and some plans cap your payment at the amount you would owe under the 10-year Standard Repayment Plan.

The payment is reduced by $50 for each dependent you claim. Additionally, under RAP, if you make an on-time payment, any unpaid monthly interest is waived. The Department of Education may also add a matching principal payment of up to $50 per month if your on-time payment does not reduce your principal by at least $50.

Under PAYE and IBR for new borrowers, payments are set at 10% of discretionary income. Discretionary income is typically defined as income above a certain poverty guideline, but the exact formula is not detailed in available sources. Payments under these plans are capped: they cannot exceed the amount you would pay under the 10-year Standard Repayment Plan. For borrowers who are not new borrowers under IBR, the percentage rises to 15% of discretionary income, with the same cap.

ICR uses a different approach: your payment is the lesser of 20% of discretionary income or a fixed 12-year payment amount adjusted for your income. This means your payment may be higher than under other IDR plans if your income is high, but it can be lower if your income is low.

• RAP: 1% to 10% of AGI, minimum $10, reduced by $50 per dependent.
• PAYE: 10% of discretionary income, capped at Standard 10-year amount.
• IBR (new borrowers): 10% of discretionary income, capped at Standard amount.
• IBR (other borrowers): 15% of discretionary income, capped at Standard amount.
• ICR: Lesser of 20% of discretionary income or a fixed 12-year payment.

Sources: Edfinancial Services (Federal Student Aid servicer), U.S. Department of Education, Student Loan Borrower Assistance (SLBA), Credible

Eligibility Requirements for IDR Plans

Eligibility for IDR plans depends on your loan types, disbursement dates, and whether you have received any new loans. Under current rules, borrowers with loans disbursed on or after July 1, 2026, are generally limited to RAP. To qualify for RAP, you must have eligible Direct Loans but not Parent PLUS Loans. Parent PLUS loans are not eligible for RAP, and neither are consolidation loans that repaid Parent PLUS loans.

For the older plans like PAYE and ICR, eligibility is restricted to loans disbursed before July 1, 2026. PAYE also requires that you meet the definition of a 'new borrower': you must have had no outstanding federal student loan balance on or after October 1, 2007, and must have received a Direct Loan disbursement on or after October 1, 2011. ICR is available to most Direct Loans, and Parent PLUS loans can qualify only if they are consolidated into a Direct Consolidation Loan before July 1, 2026.

IBR remains available to borrowers with eligible loans disbursed before July 1, 2026, but only if they have not received a new federal loan on or after that date. For Parent PLUS loans, the only path to IDR is through consolidation into a Direct Consolidation Loan, and this must occur before July 1, 2026, to be eligible for ICR. After ICR ends, there is no IDR option for Parent PLUS loans, so borrowers with such loans should consult official guidance for their options.

Borrowers with defaulted loans are not eligible for any IDR plan until the default is resolved.

• RAP: Direct Loans (excluding Parent PLUS and related consolidation loans); loans disbursed on/after July 1, 2026.
• PAYE: Most Direct Loans disbursed before July 1, 2026; must meet new borrower requirements.
• ICR: Direct Loans disbursed before July 1, 2026; Parent PLUS may qualify if consolidated before that date.
• IBR: Direct and FFEL loans disbursed before July 1, 2026; must not have new loans on/after that date.
• Defaulted loans are not eligible for any IDR plan.

Sources: Federal Student Aid (U.S. Department of Education), Edfinancial Services (Federal Student Aid servicer), Student Loan Borrower Assistance (SLBA), Credible

How to Apply for an Income-Driven Repayment Plan

Applying for an IDR plan is done through the U.S. Department of Education or your loan servicer. You typically need to submit an application that includes information about your income, family size, and loans. You'll also need to provide documentation, such as tax returns or pay stubs, to verify your income. The exact documentation required may vary depending on your situation, but you can expect to provide proof of income and family size.

Once approved, you will be enrolled in the plan, and your payments will be calculated based on the information you provided. You must recertify your income and family size annually to remain on the plan. If you fail to recertify, your payments may revert to the amount under the Standard Repayment Plan, and you may lose progress toward income-driven repayment forgiveness.

• Complete the IDR application online or through your loan servicer.
• Provide income documentation (e.g., tax returns) and family size information.
• Recertify your income and family size each year.

1. Gather your federal student loan information, including loan types and balances.
2. Determine your adjusted gross income from your most recent tax return, or use alternative documentation if your income has changed.
3. Decide which IDR plan you're eligible for and that best fits your goals.
4. Submit the application through the Federal Student Aid website or your loan servicer.
5. Track your recertification date and submit updated information annually.

Sources: Federal Student Aid (U.S. Department of Education), Student Loan Borrower Assistance (SLBA), Credible

Pros and Cons of Income-Driven Repayment

Income-driven repayment plans offer significant advantages for many borrowers. The primary benefit is affordability: because payments are based on income, they can be much lower than under standard repayment, especially when your income is low. IDR plans also provide a path to loan forgiveness after a set number of years—typically 20 to 30 years depending on the plan—which can be a lifeline for borrowers with high debt relative to their earnings.

However, IDR plans have drawbacks. You may pay more in interest over time because the extended repayment period means interest accrues over a longer term. Additionally, payments under some plans, like RAP, are not capped, meaning higher-income borrowers could owe more under IDR than they would under a fixed-payment plan. There is also the administrative burden of annual recertification, and failure to recertify can lead to payment increases. Finally, IDR plans are not available for all loan types—Parent PLUS loans, for example, are not eligible for RAP.

• Pros: Lower monthly payments, potential for loan forgiveness, adjustments to income changes.
• Cons: More interest over time, payment can increase with income, annual recertification required, not all loans qualify.

Sources: Federal Student Aid (U.S. Department of Education), Student Loan Borrower Assistance (SLBA), Savingforcollege.com, Credible

How IDR Interacts with Loan Forgiveness

Income-driven repayment plans are directly tied to loan forgiveness programs. Under each IDR plan, any remaining balance is forgiven after you make a certain number of qualifying monthly payments—20 years for PAYE and new-borrower IBR, 25 years for ICR and other-borrower IBR, and 30 years for RAP. This forgiveness is available to all eligible borrowers who complete the required payment period.

Additionally, payments you make under any IDR plan may count toward Public Service Loan Forgiveness (PSLF), provided you meet other requirements, such as working full-time for a qualifying employer. This can lead to forgiveness after just 10 years of qualifying payments for eligible public service employees. If you are pursuing PSLF, it's important to ensure you are on an income-driven plan and that you submit the required employment certification forms.

• IDR plans offer forgiveness after 20, 25, or 30 years of qualifying payments.
• Payments made under IDR can count toward Public Service Loan Forgiveness.
• Forgiveness tax implications may vary; consult a tax professional for your situation.

Sources: Federal Student Aid (U.S. Department of Education), Edfinancial Services (Federal Student Aid servicer), Student Loan Borrower Assistance (SLBA), Credible

Named-Item Comparison Matrix: Which IDR Plan Should You Consider?

To help you compare the available IDR plans at a glance, the table below summarizes key features. Note that the SAVE Plan is no longer available, and the plans are shown with their current status as of 2026.

Sources: Federal Student Aid (U.S. Department of Education), Edfinancial Services (Federal Student Aid servicer), U.S. Department of Education, Student Loan Borrower Assistance (SLBA), Credible