Income-Driven Repayment Plans for Student Loans

If your federal student loan debt is high compared to your income, an income-driven student loan repayment plan may be an option to consider.

Income-driven repayment (IDR) plans base your monthly payments on your income; family size also factors in. Due to recent legislation, options for income-driven plans have changed, and more changes are expected in the next two years.

Read on to learn about student loan income-based repayment — including the repayment plans currently available and what will be changing — to help decide if an IDR plan might be right for your situation.

What Is an Income-Driven Repayment Plan?

Income-driven student loan repayment plans were designed to ease the financial hardship of federal student loan borrowers and help them avoid default when struggling to pay off student loans. Those who enroll in the plans tend to have large loan balances and/or low earnings.

The idea is straightforward: Pay a percentage of your monthly income above a certain threshold for up to 30 years. On the Income-Based Repayment (IBR) plan and the new Repayment Assistance Plan (RAP), you are then eligible to get any remaining balance forgiven.

Income-driven repayment plans are also the only repayment options that will help you qualify for the Public Service Loan Forgiveness program. (Standard Repayment also qualifies for borrowers with loans disbursed before July 1, 2026, but they probably wouldn’t have any debt left to forgive after the 10-year term.)

As of March 2026, about 12.9 million borrowers were enrolled in an income-driven repayment plan.

How Income-Driven Plans Differ from Standard Repayment

The three income-driven repayment plans currently available for borrowers with loans taken out before July 1, 2026 (IBR, Pay As You Earn, and Income-Contingent Repayment), adjust your monthly student loan payment in accordance with your discretionary income and family size. They also extend your loan terms to 20 or 25 years. These plans are meant to provide relief for borrowers who have trouble affording payments on the Standard Repayment Plan, and payments for some borrowers may be as low as $0. If your income changes, your monthly payments will change along with it.

On the new RAP plan, your payments are based on your adjusted gross income (AGI), with a term of up to 30 years.

Your loans do accrue interest on an income-driven plan, but the IBR and RAP plans offer some relief. Specifically, the government will pay any interest charges that your monthly payments on IBR don’t cover on subsidized loans for up to three years. However, you’re responsible for all the interest after this three-year period. You always have to pay the interest that accrues on unsubsidized loans. On RAP, the government will cover any unpaid interest that your loan payments don’t cover each month.

By contrast, the Standard Repayment Plan, which is available for borrowers with loans taken out before July 1, 2026, doesn’t calculate your monthly payments based on your income. Instead, it gives you a fixed monthly payment based on a 10-year repayment term (or a 10- to 30-year term for Direct Consolidation Loans). By making this payment each month, you’ll pay off your full balance at the end of your term. The minimum payment on the Standard Plan is $50.

On the new Tiered Standard Plan for borrowers with loans disbursed on or after July 1, 2026, monthly payments are fixed, with repayment terms ranging from 10 to 25 years, based on the total student loan balance. The minimum payment on this plan is also $50.

Federal student loans automatically go on Standard Repayment or Tiered Standard unless borrowers apply for an alternative plan. If you prefer an income-driven plan, you can apply for it on the Federal Student Aid (FSA) website.

Types of Income-Driven Repayment Plans

There are currently several income-driven repayment plans available. Which plan a borrower may be eligible for depends on when they took out their loans. Here’s a closer look at each plan.

RAP Plan (new Repayment Assistance Program)

The Trump administration’s “One Big Beautiful Bill” created the RAP program and it was implemented in July 2026. Borrowers with loans taken out before July 1, 2026 will be able to access RAP or IBR, while borrowers with loans disbursed on or after July 1, 2026 will only have RAP or the new Tiered Standard Plan.

While the existing IDR plans use discretionary income, the new RAP bases your payments on your adjusted gross income (AGI). Depending on your income, you’ll pay 1% to 10% of your AGI over a term that spans up to 30 years.

If you still owe money after 30 years, the rest will be forgiven. The government will cover unpaid interest from month to month, as well as make sure your loan’s principal goes down by at least $50 each month.

All borrowers are required to pay at least $10 per month on RAP. This plan may offer lower monthly payments than the current IDR options, but borrowers could also pay more interest over the life of the loan due to the longer repayment term.

Income-Based Repayment Plan (IBR)

While most of the pre-existing income-driven repayment plans will close in the coming years, IBR will remain open and available to current borrowers. If you’re currently on PAYE or ICR, for example, you have the option of switching to IBR before your plan gets shut down.

On Income-Based Repayment, borrowers pay 10% of their discretionary income each month on a 20-year term if they first borrowed after July 1, 2014. If they borrowed before that date, their monthly payment percentage will be 15% and their repayment term will be 25 years.

IBR will forgive your remaining balance if you still owe money at the end of your term. PAYE and ICR no longer offer loan forgiveness, but you can get credit for your PAYE and ICR payments if you switch to IBR.

Income-Contingent Repayment Plan (ICR)

The Income-Contingent Repayment plan sets borrowers’ payments to 20% of their discretionary income and has a repayment term of 25 years.

ICR is currently available to borrowers with loans taken out before July 1, 2026, but it is scheduled to close. Those on the ICR plan have until July 1, 2028 to switch to IBR or RAP. Otherwise, they will automatically be moved to RAP.

Pay As You Earn Repayment Plan (PAYE)

Like ICR, PAYE is currently available to borrowers with loans disbursed before July 1, 2026, but it’s set to close. Since PAYE will be shutting down, you’ll have until July 1, 2028 to switch to IBR or RAP or you will automatically be moved to RAP. Find out more about how PAYE compares to IBR.

To qualify for PAYE, you must be a new borrower as of October 1, 2007 and have received a Direct loan disbursement on or after October 1, 2011. Plus, you’re only eligible if your monthly payment on PAYE is less than what it would be on the Standard 10-year plan.

PAYE sets your monthly payments to 10% of your discretionary income and extends your loan terms to 20 years.

SAVE Plan (Saving on a Valuable Education)

The SAVE plan is no longer available and is ending. Introduced by the Biden administration in 2023, SAVE offered lower monthly payments and faster loan forgiveness than the other income-driven options.

The plan was struck down by legal challenges from Republican-led states, and SAVE borrowers were placed in an interest-free forbearance starting in the summer of 2024. However, due to recent court actions, borrowers on SAVE whose loans had been in forbearance must select a new payment plan and begin repaying their loans. The Education Department (ED) is encouraging borrowers to take action soon. If they don’t, ED says their loan servicer will place them in a new plan. Borrowers can find out more about IDR court plan actions on the FSA website.

Income-Sensitive Repayment Plan

The Income-Sensitive Repayment plan is open only to low-income borrowers with Federal Family Education Loans (FFEL). These loans are no longer available; the FFEL program ended in 2010. Direct loans, which replaced FFEL loans in 2010, are not eligible for this plan.

On Income-Sensitive Repayment, borrowers’ monthly payments increase or decrease based on their annual income. They will make payments on their loans for up to 10 years.

How Income-Based Student Loan Repayment Works

In general, with income-based repayment of student loans, borrowers qualify for lower monthly loan payments if their total student loan debt at graduation exceeds their annual income.

To figure out if you qualify for a plan, you must apply at StudentAid.gov and submit information to have your income certified. The monthly payment on your income-driven repayment plan will then be calculated. If you qualify, you’ll make your monthly payments to your loan servicer under your new income-based repayment plan for student loans.

You’ll generally have to recertify your income and family size every year or allow the ED to access your tax information and recertify for you. Your payments may change as your income or family size changes. As for how to recertify for income-driven repayment, you can do it online at the FSA website or by mail.

Pros and Cons of Income-Driven Repayment

IDR plans have advantages and disadvantages. Here are some potential benefits and drawbacks to consider as borrowers weigh their repayment plan options.

Pros

•   Borrowers typically gain more affordable student loan payments.

•   Any remaining student loan balance is forgiven after 20 or 25 years of repayment on the Income-Based Repayment plan or after 30 years on the Repayment Assistance Plan.

•   The plans provide forgiveness of any balance after 10 years for borrowers who meet all the qualifications of the Public Service Loan Forgiveness (PSLF) program.

•   Low-income borrowers may qualify for payments of $0, and payments of $0 still count toward loan forgiveness. On the new RAP option, the minimum monthly payment is $10.

•   The IBR plan and new RAP plan offer some interest benefits if your monthly payments don’t cover your full interest charges.

Cons

•   Stretching payments over a longer period means paying more interest over time.

•   While forgiven amounts of student loans were free from federal taxation until December 31, 2025, forgiven student loan debt under an income-driven plan in 2026 or later may be taxable (except for the PSLF program).

•   Borrowers in most income-based repayment plans need to recertify income and family size every year.

•   If a borrower gets married and files taxes jointly, the combined income may increase loan payments.

•   The system can be confusing to navigate, especially with all the legal challenges and recent legislation.

It’s worth noting that borrowers with private student loans are not eligible for federal income-driven repayment plans. Private student loan borrowers struggling to afford their monthly payments may wish to explore options that might help make repayment more manageable, such as student loan refinancing, especially if they may qualify for a lower interest rate. Borrowers could also inquire if their lender offers any kind of loan cancellation program (many private lenders don’t, but some do) or some type of short-term payment relief such as a temporary deferment.

Other Student Loan Repayment Options

Income-driven repayment plans aren’t your only option for paying back student loans. Here are a few alternatives to IDR plans that are currently available.

Standard Repayment Plan

The Standard Repayment Plan is available to borrowers with student loans that were disbursed before July 1, 2026. This plan has fixed monthly payments for up to 10 years (the term is 10 to 30 years for those with consolidation loans). This plan is designed so that by the end of a borrower’s term, their total debt will have been repaid.

Tiered Standard Plan

The Tiered Standard Plan replaces the Standard Repayment Plan for borrowers with federal Direct loans issued on or after July 1, 2026. Monthly payments on this plan are fixed. The repayment terms range from 10 to 25 years and they are based on the total student loan balance.

For borrowers with less than $25,000 in loans, the repayment term is 10 years; for loans from $25,000 to $49,999 the term is 15 years; for loans from $50,000 to $99,999, the term is 20 years; and for loans of $100,000 or more, the term is 25 years.

Graduated Repayment Plan

The Graduated Repayment Plan, which is available to borrowers with loans disbursed before July 1, 2026, spans 10 years for most loans, but it can go from 10 to 30 years for consolidation loans. On Graduated Repayment, monthly payments start out low and increase every two years. Like the current Standard Plan, borrowers will usually be out of debt at the end of your term. However, they will typically end up paying more interest on this plan. Graduated Repayment may be an option for borrowers whose income is low starting out but expect it to increase over time.

Extended Repayment Plan

Extended Repayment gives borrowers whose Direct loans were disbursed before July 1, 2026 up to 25 years to pay back their loans, but they must owe more than $30,000 and have borrowed after October 7, 1998. They can choose fixed or graduated payments. Their monthly payments will go down when they extend their term, but they will typically pay more interest overall with a longer term.

How to Qualify for Income-Driven Repayment

You can apply for income-driven repayment on the FSA website. The process typically takes about 10 minutes.

Here’s more on how to change your student loan repayment plan to an income-driven one.

Required Documentation

When you apply for an IDR plan, you can upload documentation verifying your income or allow the ED to access your tax information and import it into your application. Along with sharing your income, you’ll need to provide your mailing address, phone number, and email. If you’re married, you’ll also provide your spouse’s financial information.

Annual Recertification Process

Every year, you have to recertify, or update, your income and family size so your loan servicer can adjust your monthly payments accordingly. This recertification is required even if your income or family size hasn’t changed.

If you fail to recertify your plan, your servicer will no longer base your payments on your income. Instead, you’ll pay the amount you would on the standard 10-year plan. If you fail to recertify IBR, you’ll have the added consequence of interest capitalization, meaning your interest charges will be added to the principal balance of your loan.

You can recertify your plan on the Federal Student Aid website by uploading documentation of your income. Alternatively, you can allow the ED to access your federal tax information and automatically recertify your plan for you.

If you don’t give your consent for this (or aren’t eligible for auto-recertification), you’ll have to manually recertify your plan each year.

The Takeaway

Income-driven repayment may offer relief if you’re struggling to afford your monthly payments. These plans adjust your monthly student loans bills based on your income while typically giving you more time to pay back your debt. Plus, income-driven plans qualify for PSLF. A downside of IDR plans, however, is that you’ll likely pay more interest with an extended term.

The options for IDR have changed due to recent legislation from the Trump administration. Most of the current plans will be shut down, leaving just the Income-Based Repayment or Repayment Assistance Plan for borrowers with loans disbursed before July 1, 2026. And for borrowers with loans taken out after July 1, 2026, the new Repayment Assistance Plan is the only IDR plan available. Staying informed about these changes can be helpful as you decide if an income-driven repayment plan is right for you.

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.

FAQ

Is income-based repayment a good idea?

For borrowers of federal student loans with high monthly payments relative to their income, income-based repayment may be a good idea because it could lower their payments. Just be aware that the income-driven repayment plans are changing and availability depends on when an individual borrowed their loans. Those with loans disbursed after July 1, 2026 have just one income-based plan available — the new Repayment Assistance Plan.

What is the income limit for income-based student loan repayment?

Generally speaking, there is no income limit to qualify for income-driven repayment plans. Some plans, such as the IBR plan, require that your monthly payments be less than what you’d pay on the standard 10-year plan. You’ll generally meet this guideline if your student loan debt is higher than your discretionary income or makes up a big portion of your income.

What are the advantages and disadvantages of income-based student loan repayment?

Generally speaking, the main advantage of these plans is lowering a borrower’s monthly payments, with the potential for eventual loan forgiveness on the IBR and RAP plans if all the rules are followed. Also, income-driven plans typically qualify for Public Service Loan Forgiveness (PSLF). A disadvantage of these plans is that it may take a borrower 20 or 25 years to repay their loans depending on the plan they’re on and how they owe. They will likely also pay more interest with a longer term.

How does income-based repayment differ from standard repayment?

With the Standard Repayment Plan, monthly payments are a fixed amount that usually ensures student loans will be repaid within 10 years. Under this plan, borrowers will generally save money over time because their monthly payments will be higher. With income-driven repayment, monthly loan payments are based on a borrower’s income, and family size factors in. These plans are designed to make payments more affordable. If you still owe a balance after 20 or 25 years on IBR, or after 30 years on RAP, the remaining amount is forgiven.

Who is eligible for income-based repayment plans?

With the PAYE and IBR plans, in order to be eligible, borrowers must have taken out loans before July 1, 2026, and their calculated monthly payments, based on their income and family size, must be less than what they would pay under the Standard Repayment Plan. Under the ICR plan, any borrower with eligible student loans disbursed before July 1, 2026 may qualify. Parent PLUS loan borrowers are also eligible for ICR if they consolidate their parent loans first. For the new RAP plan, borrowers with qualifying Direct loans are eligible.

How does the new RAP plan differ from income-based repayment?

Unlike the other income-driven repayment plans that base a borrower’s payments on 10% to 20% of their discretionary income, on RAP, payments are based on a borrower’s adjusted gross income (AGI). Depending on their income, a borrower on RAP will pay 1% to 10% of their AGI over a loan term of up to 30 years. Any remaining balance after that time will be forgiven. On the IBR plan, any remaining balance is forgiven after 20 or 25 years. On RAP, the government will cover unpaid interest each month; on IBR, the government will pay any interest charges that a borrower’s monthly payments don’t cover on subsidized loans for up to three years.

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