Payments on the IBR plan are set at 10% of your discretionary income. This can be helpful to students who start careers with unusually low starting salaries or who job-hop before settling into a career. Income-driven repayment plans offer students monthly payments that are based on their income level rather than a predetermined amount. Payments are eligible for Public Service Loan Forgiveness (PSLF)īorrowers pay more total than they would on the Standard Plan ![]() Payments can be higher than on the Standard plan Monthly payments are larger than on other income-driven plans ![]() Like with the PAYE and REPAYE plans, any forgiven balance will be subject to income tax. If you have made all of your payments during that time, the remaining balance on your loan will be forgiven at that point. The repayment term for the ICR is 25 years. Unlike with the PAYE plan, your spouse’s income will not be included in this calculation if you file taxes separately. These payments are recalculated annually and may increase or decrease if your income or family situation change. On the ICR plan, payments are set at 20% of your discretionary income or what you would pay on the Standard plan with a 12-year repayment term. Other similar plans, such as the PAYE and REPAYE plans, are often cheaper in the long run, however, the ICR is the only income-contingent repayment plan for borrowers with Parent PLUS loans. Like other income-driven plans, your payments on the ICR are based on your income and family size. ![]() The Income-Contingent Repayment Plan, or ICR, is the oldest income-driven repayment plan offered by the Department of Education. In part two, we’ll discuss the four income-driven repayment plans offered by the Department of Education In part one of our post “Understanding Federal Payment Plans For Paying Back Student Loans,” we explained the Standard Plan, Graduated Repayment Plan, Extended Repayment Plan, and Income-Sensitive Repayment Plan. But which plan is best for you will depend on the repayment options available for your type of loan and your financial situation. One of the advantages of federal student loans over private student loans is that federal loans offer more flexible options for repayment. If you’re considering taking out federal student loans, it’s a good idea to first consider the repayment plans that will be available to you.
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