My IDR Student Loan Is at $0: Now What?

By Rebecca Safier · April 24, 2024 · 6 minute read

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My IDR Student Loan Is at $0: Now What?

Income-driven repayment (IDR) plans adjust your monthly student loan payments to a percentage of your discretionary income. Depending on your income and family size, you could have a payment as low as $0.

In this case, you can pay nothing on your student loans without falling into delinquency or default. Plus, you’ll still be making progress toward loan forgiveness, which you can receive after 20 or 25 years on an IDR plan.

Your $0 monthly payments can also count toward Public Service Loan Forgiveness (PSLF), which offers loan forgiveness after 10 years of working at a qualifying not-for-profit or government agency.

That’s the topline on this situation. Read on to learn more about how qualifying for $0 student loan bills on an IDR plan can impact your payment obligations and progress toward loan forgiveness.

What Are Income-Driven Repayment Plans?

When paying back student loans, you have the option of applying for an income-driven repayment plan. An IDR plan can be a good fit if you’re looking to reduce your monthly payments, since it adjusts your bills to a percentage of your discretionary income.

There are four options for income-driven repayment:

•   SAVE: The SAVE plan, which replaces the REPAYE option, adjusts your payments to 10% of your discretionary income. It calculates that as the difference between your annual income and 225% of the poverty guideline for your family size and state. It has the most generous interest subsidy of all the IDR plans, as the government will cover any unpaid interest from month to month. Starting in the summer of 2024, the SAVE plan may also offer loan forgiveness after 10 years, depending on your loan amount and type. Plus, it will slash payments on undergraduate student loans to 5% of your discretionary income.

•   Pay As You Earn (PAYE): The PAYE plan also adjusts your payments to 10% of your discretionary income, but the discretionary income calculation is less generous at 150% of the poverty guideline. It offers loan forgiveness after 20 years.

•   Income-Based Repayment: On this plan, you’ll pay 10% or 15% of your discretionary income for 20 or 25 years, depending on when you borrowed your loans.

•   Income-Contingent Repayment: This plan is the least generous of the IDR plans. It sets your payments at 20% of your discretionary income, which uses 100% of the poverty guideline. However, ICR is the only income-driven plan available for parent loans.

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Student Loan Forgiveness Overview

Most income-driven repayment plans offer loan forgiveness at the end of your repayment term. Currently, all the plans require 20 or 25 years of repayment before you can get your remaining balance forgiven.

Starting in July 2024, though, the SAVE plan will offer a faster path to loan forgiveness for some borrowers.

•   Specifically, you can get forgiveness after 10 years on SAVE if your original balance was $12,000 or less.

•   Another year will be added to your repayment term for each additional $1,000 you borrowed, up to a total of 20 years for undergraduate student loans and 25 years for graduate student loans or a mix of both.

Keep in mind that you might have to pay taxes on any loan forgiveness you receive from an IDR plan after 2025. Prepare to pay this final student loan bill before you can say goodbye to your federal student debt.

Recommended: Guide to Student Loan Transfers

If My IDR Plan Is $0, Does It Count Towards Payments for Forgiveness?

The answer to “What is the minimum student loan repayment?” can, in fact, be zero. And if your IDR plan doesn’t require you to pay anything on your student loans, you may be relieved to hear that your IDR student loan $0 monthly payments will still count toward student loan forgiveness. Even though you’re not paying anything, you’ll still be making progress toward the 20 or 25 years of required payments to get your loans forgiven.

If you’re pursuing loan forgiveness through the PSLF program, you’ll get credit for your $0 payments for that as well. You need to make 120 payments on an IDR plan, along with working in eligible public service full-time, to qualify for PSLF. Unlike the loan forgiveness you get from an IDR plan, the forgiveness you get from PSLF is not taxable.

Keep in mind, though, that your payments may not stay at $0 forever. You must recertify your income and family size on an annual basis so your loan servicer can recalculate your income-based repayment plan. If your circumstances change, your monthly payment on an IDR plan could increase.

Should I Refinance My Student Loans Instead?

If you’re looking for strategies to manage your student loans, refinancing is another option. When you refinance student loans, you exchange one or more of your existing loans from a private lender.

On the plus side:

•   If you have good credit and steady income, you could qualify for a better interest rate than you have now. Reducing your interest rate could save you money over the life of your loans and help you pay off your debt faster.

•   You’ll also get to choose new terms for paying off your student loan. You could choose a short term to pay off your debt sooner or a longer term of 15 or 20 years to reduce your monthly payments. Keep in mind that a longer term can mean you pay more interest over the life of the loan.

Refinancing does have some risks, though, that are important to understand before you apply.

•   Specifically, refinancing federal student loans means losing access to federal benefits and protections, such as income-driven repayment plans and forgiveness options.

If you want to use income-driven repayment, pursue loan forgiveness, or take advantage of another federal perk, it wouldn’t be wise to refinance your federal student loans with a private lender. However, refinancing high-rate private student loans could be advantageous if you can get a better interest rate.

Recommended: Why Your Student Loan Balance Never Seems to Decrease

The Takeaway

Income-driven repayment can be a lifesaver if you’re struggling to afford your monthly student loan payments. An IDR plan will limit your payments to a percentage of your income while extending your loan terms to 20 or 25 years. If you still owe a balance at the end of your term, the rest will be forgiven.

Depending on your finances, you could get a payment as low as $0 on an IDR plan, but you’ll still get credit toward loan forgiveness. Keep in mind, though, that you may be in repayment for a long time on an IDR plan before you can say goodbye to your student loans.

You may also want to consider refinancing them for better rates and new repayment terms.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.


How do I qualify for a $0 student loan payment?

You may be able to qualify for a $0 student loan payment on your federal student loans through an income-driven repayment plan. These plans calculate your monthly payments based on your discretionary income and family size. If your annual income falls below a certain percentage of the poverty guideline for your state, you could qualify for a $0 monthly payment.

Can I lower my IDR payment?

Your loan servicer will calculate your IDR payment based on your discretionary income and family size. If you have a decrease in your income or increase in your family size, you could see your IDR payment go down. You’ll recertify your IDR plan annually with your most up-to-date information, but you can request an adjustment sooner.

Will income-based repayment go away?

There’s no sign that income-based repayment plans will go away. In fact, the Biden administration recently introduced the SAVE income-driven repayment plan, which offers a more generous payment calculation and interest subsidy than the income-driven repayment options.

Photo credit: iStock/JLco – Julia Amaral

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

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Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.


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