Income-Driven Repayment (IDR) Plans

What to know about IDR Plans

IDR plans may offer lower payments because they are based on your income and family size. Payments can be as low as $0 per month, depending on your circumstances.

The following plans are considered IDR

  • Saving on a Valuable Education (SAVE)

  • Pay As You Earn (PAYE)

  • Income-Based Repayment (IBR)

  • Income-Contingent Repayment (ICR)

These repayment plans are unique

  • Eligibility - Based on income, family size, your loan balance(s), and the type(s) of federal student loans you have.

  • Annual Renewal - Even if your income or family size is the same, you are still required to recertify your IDR plan annually.

  • Annual Proof of Income - Income documentation must be provided with your annual recertification. If you don’t have income documentation to provide with your IDR application, you can request your tax transcript  this link will open in a new window at irs.gov.

  • Loan forgiveness opportunity - After you make 20-25 years of qualifying payments, your remaining loan balance(s) may be forgiven. These repayment plans also work for Public Service Loan Forgiveness. To view your monthly payments that count toward IDR forgiveness, visit StudentAid.gov  this link will open in a new window.

  • Interest subsidy - SAVE, IBR, and PAYE offer interest subsidies for some or all of your loans.

  • Paying Ahead – If your loan is paid ahead when you start or renew an IDR plan, the paid ahead status will be removed when your IDR plan is processed. This will be reflected in your disclosure statement. You can continue to pay the loan ahead, but only up through the anniversary date of the IDR plan, which is 12 months.

Interest Subsidies (Paid by the Government)

The government will pay the interest that is not satisfied by your calculated IDR monthly payment. The percent paid by the government depends on the payment plan, the loan type, and may depend on the length of time on the plan.

SAVE

Unsubsidized and Subsidized loans

  • 100% for the time spent on this repayment plan for subsidized and unsubsidized loans.

PAYE*

Subsidized loans

  • No interest benefit as of August 9, 2024.

IBR*

Subsidized loans

  • 100% for the first 3 consecutive years

* The 36-month period of up to 100% subsidy is not refreshed when switching between IDR plans.

Learn more about IDR Plans

The Department of Education has additional information about the repayment plans and the eligibility requirements for each.

Parent PLUS Loans do not qualify for IDR Plans. Borrowers with Parent PLUS loans may consolidate and request ICR.

If your consolidation loan was disbursed on or prior to 7/1/2006 and the consolidation loan includes Parent PLUS loans, your consolidation loan may not be eligible for IDR Plans. FAQs about IDR plans are also available.

Importance of Annual Renewal of IDR

When it is time to renew, you will be sent notification. A new IDR application to re-certify your income and family size and applicable income documentation will be required for renewal. Even if your information has not changed, you are still required to complete the annual renewal to retain a calculated IDR monthly payment amount based on income and/or family size. If the annual renewal is not received timely your monthly payment amount may substantially increase and unpaid interest may be capitalized (added to the principal balance of your loan(s)).

What will happen if I don't renew IDR by the annual deadline?

It's important for you to complete a new IDR application and provided applicable income documentation to re-certify your income and family size by the specified annual renewal deadline. If you don't renew by the deadline, the consequences vary depending on the plan.

  • Under the SAVE Plan, if you don't renew by the annual deadline, you'll be removed from the SAVE Plan and placed on an Alternative Repayment Plan. Under this Alternative Repayment Plan, your required monthly payment is no longer based on your income and family size which may substantially increase your monthly payment amount. Instead, your monthly payment will be the amount necessary to repay your loan(s) in full by the earlier of 10 years from the date you begin repaying under the Alternative Repayment Plan, or the ending date of your 20- or 25-year SAVE Plan repayment period. You may choose to leave the Alternative Repayment Plan and repay under any other repayment plan for which you are eligible. Payments on the SAVE Alternative Repayment Plan do not count toward Public Service Loan Forgiveness.

  • Under the PAYE Plan, the IBR Plan, or the ICR Plan, if you don't renew by the annual deadline, you'll remain on the same IDR plan, however your monthly payment will no longer be based on your income which may substantially increase your monthly payment amount. Instead, your required monthly payment amount will be the amount you would pay under a Standard Repayment Plan with a 10-year repayment period, based on the loan amount you owed when you initially entered the IDR plan. You may return to making payments based on income if you complete a new IDR application and provide the applicable income documentation.

If I'm removed from the SAVE Plan because I didn't renew by the annual deadline, is it possible to return to the SAVE Plan?

You can return to the SAVE Plan only if you provide MOHELA with an IDR application and include documentation of your income for the period when you were not on the SAVE Plan. Depending on how long it has been since you were removed from SAVE, you may need to provide income documentation for the past year or several prior years may be required.

During the gap in the SAVE plan, MOHELA will calculate what your monthly payment amount would have been under the SAVE Plan compared to the monthly payment amount under the Alternative Repayment Plan (or any other plan) for the same period. If the monthly payment amount under the SAVE Plan would have been more than it was under the Alternative Repayment Plan or another plan during this period, your new SAVE monthly payment amount will be increased. The amount of the increase will equal the difference between what you were required to pay during the period when you were not on the SAVE Plan, and the amount you would have been required to pay if you had remained on the SAVE Plan, divided by the number of months remaining in your 20- or 25-year repayment period.


For example:
You received loans for undergraduate study and begin repaying those loans under the SAVE Plan when they first enter repayment. Because all of the loans you are repaying under SAVE were received for undergraduate study, your repayment period is set at 20 years.

After your first year of repayment under the SAVE Plan, you do not renew.
Starting with year 2 of repayment, you are placed on the Alternative Repayment Plan. Your repayment period is set at 10 years, because 10 years is less time than the remaining portion (19 years) of your SAVE Plan repayment period.

Your payment amount under the Alternative Repayment Plan is $200 per month, and you pay this amount for 12 months.

You decide to reenter SAVE and provide the necessary documentation to your loan servicer. Your loan servicer determines that your SAVE payment amount for the past year would have been $300 per month.

You paid $1,200 less over the course of the year under the Alternative Repayment Plan than you would have paid during the same period under the SAVE Plan.

When you reenter SAVE, you will have 19 years of your repayment period remaining, so the $1,200 is divided by 228 (there are 228 months in 19 years), which equals $5.26 per month. This amount will be added to your payment amount each month that you remain in SAVE.

Your payment amount under SAVE for the upcoming year (based on newer income documentation) will be $150 per month.

After the increase is added in, your total SAVE payment will be $155.55 per month for the next year.