Income-Contingent Repayment costs more each month than other income-driven repayment plans. ICR caps payments at 20% of your discretionary income and lasts 25 years. 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 vs. other income-driven plans
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.
- Best for: Parent borrowers; slightly lower payments.
All income-driven 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. Use Federal Student Aid’s Loan Simulator to see how much you might pay under different plans.
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:
Because payments on ICR are higher than on other income-driven plans, you’ll tackle more of the interest as it accrues. You’ll also minimize any future costs should you get forgiveness under ICR, as the forgiven amount would be taxable.
If minimizing interest accrual is your goal, consider REPAYE instead. REPAYE offers subsidies on unpaid interest that ICR doesn’t, and you can always pay extra each month to make a greater dent in what you owe. But if you don’t think you’ll stick with making those extra payments, ICR may make more sense for you.
How to apply for ICR
You must enroll in Income-Contingent Repayment. You can do this by mailing a completed income-driven repayment request to your student loan servicer, but it’s easier to 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.
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.
The federal government offers extended repayment and graduated repayment plans, which lower your payments but aren’t based on your income.
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.