Income-Contingent Repayment: How It Works and Whom It’s Best For
Income-Contingent Repayment is the least generous income-driven plan, but it’s the only one parent PLUS borrowers can use. Enrollment reopened in December 2024.
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Editor's note, Jan. 3, 2025: ICR reopened for new enrollment in late December 2024. Borrowers who switch from SAVE to ICR or another income-driven repayment plan (like PAYE) will resume earning credit toward Public Service Loan Forgiveness or income-driven repayment forgiveness.
The Education Department previously limited new ICR enrollment on July 1, 2024. However, lawsuits temporarily blocked the SAVE repayment plan over the summer, leaving 8 million borrowers with an interest-free payment pause. SAVE borrowers are not earning forgiveness credit for months spent in the pause.
Expect application processing delays. More information is available on ED.gov/SAVE.
The Income-Contingent Repayment (ICR) plan costs more each month than other income-driven student loan repayment plans offered by the federal government. ICR caps monthly payments at 20% of your discretionary income and lasts 25 years before you can get your remaining debt forgiven. Still, this plan may be your best income-driven choice in the following instances:
You have parent PLUS loans or a consolidation loan that includes parent PLUS loans.
You want slightly lower payments to potentially pay less interest.
ICR at a glance
Repayment length: 25 years.
Payment amounts: 20% of your discretionary income or fixed payments based on a 12-year loan term, whichever is lower.
Other qualifications: Must have federal direct loans. Parent PLUS loans must be consolidated into a direct loan to be eligible.
Best for: Parent borrowers; those seeking slightly lower payments.
ICR vs. other income-driven plans
All income-driven repayment plans share some similarities. Each caps payments to between 10% and 20% of your discretionary income and forgives your remaining loan balance after 20 or 25 years of payments.
If you're eligible for Public Service Loan Forgiveness, you can get your remaining debt forgiven after just 10 years in an income-driven plan. Use the Education Department’s student loan simulator to see how much you might pay under different plans.
ICR is the only income-driven plan available for parent PLUS loans. Before signing up for the plan, parent PLUS borrowers must first consolidate the student loan into a federal direct loan.
If ICR doesn't sound right for you, consider one of the other three income-driven repayment plans: Saving on a Valuable Education (SAVE), Pay as You Earn (PAYE) or Income-Based Repayment (IBR).
Not sure which income-driven plan to select? Consider asking your servicer to place you on the plan you qualify for with the lowest monthly payment. But specifically choosing Income-Contingent Repayment may be right for you in the following instances:
How to apply for ICR
You must actively enroll in Income-Contingent Repayment. You can do this by mailing a completed income-driven repayment request to your student loan servicer, or complete the process online. You can change your student loan repayment plan at any time.
Visit studentaid.gov. Log in with your Federal Student Aid ID, or create an FSA ID if you don’t have one.
Select income-driven repayment plan request. Preview the form so you know what documents to have ready, like your tax return.
Choose your plan. If you qualify for more than one income-driven repayment plan, you can be automatically placed in the plan with the lowest payment or specifically choose ICR if it makes the most sense for you.
Complete the application. Enter the required details about your income and family. Remember to include your spouse’s information, if applicable, as it will affect your payments under ICR.
You can temporarily self-report income
Borrowers can self-report their income. That means you don't have to submit tax documentation when you report your income. This can be completed online when you submit the IDR application.
Other ways to pay less
If income-driven repayment isn't right for you, the federal government offers extended repayment and graduated repayment plans, which lower your payments but aren’t based on your income. You may pay more interest under these plans, though, and neither offers loan forgiveness.
You also may be able to pay less by refinancing your student loans. Refinancing federal student loans can be risky, as you’ll lose access to income-driven repayment and other federal loan programs and protections. But if you’re comfortable giving up those options and have strong credit as well as a steady income, refinancing may save you money.
Top Student Loan Refinance Lenders
