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Income-driven repayment, or IDR, plans are a safety net for federal student loan borrowers having difficulty making payments on a standard 10-year repayment plan. They carry a bonus that no other type of repayment plan does: eventual forgiveness.
All four income-driven repayment plans cap payments at a portion of your discretionary income and extend your repayment term. At the end of the repayment term, whatever is left of your balance is forgiven automatically.
To benefit from income-driven repayment forgiveness, you first must enroll in a plan. The process takes about 10 minutes, according to the federal student aid office. You can apply online, but contact your student loan servicer for guidance. You must recertify your income annually or whenever it changes
Here are the four plans and how long it will take you to see the debt forgiven with each:
Most federal direct borrowers are eligible for Saving on a Valuable Education (SAVE). Parent PLUS borrowers are eligible to enroll in an income-contingent plan only.
How much debt is forgiven with income-driven repayment?
There’s no cap on the amount of student debt forgiven through income-driven repayment forgiveness.
The amount of loan debt you have at the time of forgiveness will entirely depend on how much you’ve already repaid over time. It also means if your income increases over time and/or you don’t have high debt, you may repay the debt before the loan term expires. In this case, none of your debt would be forgiven.
All forgiven debt used to be considered taxable income under an income-driven plan, but this changed with the March 2021 American Rescue Plan, which made forgiven debt tax-free retroactive to Dec. 2020 through the end of 2025.
During the federal student loan forbearance that began on March 13, 2020, each month will count toward the payments needed for income-driven repayment forgiveness even if borrowers made no payment.
How many borrowers have received income-driven repayment?
Only 32 borrowers have ever seen their loans forgiven through income-driven repayment forgiveness, according to an analysis of federal data by the Student Borrower Protection Center and the National Consumer Law Center. The income-driven repayment program first started in 1995, but was income-restricted.
Take that data with a grain of salt: Most borrowers will not qualify for forgiveness through income-driven repayment until at least 2035. That’s because most borrowers are enrolled in REPAYE (now SAVE), which wasn’t available until 2015.
The Department of Education is implementing income-driven repayment fixes
Millions of borrowers are expected to benefit from one-time fixes that count past payments toward the 240 or 300 needed for income-driven repayment forgiveness.
In 2023, federal student aid will also start displaying income-driven repayment payment counts on StudentAid.gov that borrowers can see when they log into their accounts.
And the federal student aid office plans to allow more loan statuses, such as deferments and forbearances, to count toward income-driven repayment forgiveness moving forward. It’s unclear when those changes will go into effect or which loan statuses will be included.
Borrower enrollment by income-driven repayment plan
Revised Pay As You Earn (REPAYE) (replaced by the SAVE plan in summer 2023)
Pay As You Earn (PAYE)