Income Based Repayment

If you need to make lower monthly payments because your student loan debt doesn't fit your income, the Income-Based Repayment plan may be a good option for you.

To qualify for IBR, you must have a partial financial hardship. You are determined to have a partial financial hardship if the monthly amount you would be required to pay on your IBR-eligible loans under a 10-year Standard Repayment Plan is higher than the monthly amount you would be required to repay under IBR. Your payment amount may increase or decrease each year based on your income and family size. Once you've initially qualified for IBR, you may continue to make payments under the plan, even if you later no longer have a partial financial hardship. However, we encourage you to try to pay off your loan debt as quickly as you can manage, so you will want to consistently review your situation to make sure this is still the best option for you. 

Am I eligible for this repayment plan?

To find out if you are eligible for participate in the Income-Based Repayment Plan, the Department of Education has provided a calculator. Just enter some basic information and find out! Click here to use the calculator.

Which loans are eligible for this plan?

The following loans from the William D. Ford Federal Direct Loan (Direct Loan) Program and the Federal Family Education Loan (FFEL) Program are eligible for IBR:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans made to graduate or professional students
  • Direct Consolidation Loans without underlying PLUS loans made to parents
  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • FFEL PLUS Loans made to graduate or professional students
  • FFEL Consolidation Loans without underlying PLUS loans made to parents
Which loans aren't eligible for this plan?

The following loans are not eligible for repayment under IBR:

  • Any PLUS loans made to parents
  • FFEL Consolidation Loans that include underlying PLUS loans made to parents
  • Private loans
What are the monthly payments under this plan?
  • Your monthly payments are based on your income and family size and capped at the 10-year standard repayment amount.
  • They are adjusted each year, based on changes to your annual income and family size.
  • They are usually lower than other plans.
  • They may be made over a period of 25 years.
What are the advantages of IBR?
  • Pay based on what you earn: your monthly payment amount will be 15% of your discretionary income, will never be more than the amount you would be required to pay under the Standard Repayment Plan, and may be less than under other repayment plans.
  • Interest payment benefit: if your monthly IBR payment amount doesn’t cover the interest that accrues (accumulates) on your loans each month, the government will pay your unpaid accrued interest on your Direct Subsidized Loan or Subsidized Federal Stafford Loan for up to three consecutive years from the date you began repaying your loan under IBR.
  • Limitation on the capitalization of interest: while you have a partial financial hardship, interest that accrues but is not covered by your loan payments will not be capitalized, even if interest accrues during a deferment or forbearance.
  • 25-year cancellation: if you repay under IBR for 25 years and meet certain other requirements, any remaining balance will be canceled.
  • 10-year public service loan forgiveness: if, while you are employed full-time for a public service organization, you make 120 on-time, full monthly payments under IBR (or certain other repayment plans) you may be eligible to receive forgiveness of the remaining balance of your Direct Loans through the Public Service Loan Forgiveness Program.
What are the disadvantages of IBR?
  • You may pay more interest: a reduced monthly payment in IBR generally means you'll be repaying your loan for a longer period of time, so you may pay more total interest over the life of the loan than you would under other repayment plans.
  • You must submit annual documentation: to set your payment amount each year, your loan servicer, the organization that handles billing and other services for your loan, needs updated information about your income and family size. You must provide the documentation or your monthly payment amount will be reset to the amount you would be required to pay under the Standard Repayment Plan, based on the amount you owed when you began repaying under IBR. This amount will be higher than your payment under the IBR program.
  • You may have to pay taxes on the amount that is forgiven or canceled.
Can I estimate what my loan payments will be under this plan?

The Department of Education provides a calculator that will help you estimate payments and decide which repayment plan is the best for your unique situation. Try it out here. The ideal loan payment you should keep in mind when deciding on a repayment plan is 8-15% of your monthly income

Are there more tools and resources for IBR?

Do you want more detailed information about IBR? These resources to into even more detail about this repayment plan.