Income-Contingent Repayment: How It Works and Whom It’s Best For

Income-Contingent Repayment is the only one parent PLUS borrowers can use.
Ryan LaneDec 3, 2020

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Income-Contingent Repayment costs more each month than other income-driven repayment plans. ICR caps payments at 20% of your and lasts 25 years. Still, this plan may be your best income-driven choice in the following instances:

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All income-driven plans share some similarities: Each caps payments to between 10% and 20% of your and forgives your remaining loan balance after 20 or 25 years of payments. Use Federal Student Aid’s to see how much you might pay under different plans.

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If ICR doesn't sound right for you, consider one of the other three income-driven repayment plans:

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• 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.

• Best for: Parent borrowers; slightly lower payments.

In most cases, the least confusing way to select an income-driven plan is to let your servicer place you on the plan you qualify for that has the lowest monthly payment. But specifically choosing Income-Contingent Repayment may be right for you in the following instances:

You must enroll in Income-Contingent Repayment. You can do this by mailing a completed to your student loan servicer, but it’s easier to complete the process online. You can 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 . 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.

If income-driven repayment isn't right for you, the federal government offers and 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. 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.

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