Income Based Repayment – Loan Repayment of the Future?


If you are in financial difficulty due to student loan debt there are Income Based Repayment options available to assist you. Income Based Repayment and Income Contingent Repayment plans both have the same goal of relieving financial difficulty, but use different criteria to determine the level of assistance that will be provided.

The Income Based Repayment or IBR Plan determines a monthly payment structure based on the applicant’s earned income and family size. The actual amount owed is not considered except how it figures into the total financial difficulty, which must be demonstrated in order to be approved for an Income Based Repayment plan. All Direct Consolidation, PLUS and Stafford loans made under the Direct Loan or Federal Family Education Loan or FFEL Programs are included.

Difficulty is decided by looking at the applicant’s total monthly payment on all eligible loans, not the total amount owed. This payment is then checked against that person’s discretionary income, i.e. income remaining after bills are paid such as auto and house payments, rent, food and utilities. If the applicant does qualify, then future payments will be set at an amount not to exceed 10 percent of his or her discretionary income. This was previously set at 15 percent, but was lowered to ten by President Obama in an Executive signed in October of 2012 for all students who took out their loans prior to the end of 2012.

With Income Based Repayment, there is no minimum payment but the monthly amount can change each year depending on the applicant’s family size and income. Even so, a person approved for an Income Based Repayment is still responsible for the interest that accrues over the lifetime of the loan. By lifetime, that means 25 years. If the loan is not repaid after that point, and 300 payments that meet the criteria have been paid, the loan is closed and any remaining amount is forgiven or discharged. This amount is still considered taxable income and that tax will have to be paid on the year that it is discharged. In order to begin the application process for Income Based Repayment, you can call (866) 921-8053 to get assistance.

Income Contingent Repayment or ICR Plans, have a slightly different set of requirements. These plans are designed to assist those students and graduates who have decided to pursue a lower income career in public service. Family size, income and the total amount owed (not monthly payment) are the factors considered. As with Income Based Repayment Plans; the monthly payment is recalculated on an annual basis based on family size and income. The maximum lifetime of the Income Contingent Repayment loans is also 25 years. If there is any amount left of that original loan after that time, it is discharged just like the Income Based Repayment. The discharged amount is still taxable income and that tax will need to be paid the year it is due. Once your current loans are consolidated into the Student Loan Forgiveness Act, then you can choose into which repayment plan you would like to enroll into.

The number to call and begin the qualification paperwork is 1-866-921-8053.  No matter what the situation may be, there is assistance for anyone needing help with student loans. The primary repayment plans used for this process are the Income Based Repayment (IBR) and the Income Contingent Repayment (ICR) Plans. Each one uses the applicant’s income and family size to determine needed help. The Income Contingent Repayment plan also includes the total amount of qualifying loan debt an applicant has accrued. The end goal for both programs is to provide needed relief for families that find themselves overextended in an already rough economy.


  1. Marsha Blount says

    I have taught school in Texas for 24 years (14 as a public school high school art teacher and 10 years as a college professor) and was eligible to retire two years ago but could not because of the cost of living and sending three children to college.

    My husband of 37 years and I divorced last year. I was diagnosed with an illness two years ago and have large medical bills to pay.

    I still owe $16,000. in student loans with Sallie Mae.

    Is there a program where I can be forgiven for my student loans?

    I would appreciate your assistance on this.

    • says

      Marsha, have you taken a look at our Teacher Loan Forgiveness page? You may qualify for principal reduction up to $17,500 on your student loans. Another option is the public service loan forgiveness, but this would take ten years from when you are in the Direct Loan program. A third option would be to look at the income based repayment and see what kind of payment you could qualify for based on income. That can be found here

      If you need assistance you could contact us by phone and we can see if you qualify.

  2. tanya bourbonniere says

    I would love to have my student loan forgiviness plan right now I can not repay my whole loan. I do need I lot of help thank you so much

  3. Michael Carneal says

    Does anyone know who might help me deal with student loan reapayment problems free of charge

    • Germaine Price says

      I currently am enrolled in the IBR program. I have made 2 years of payments and have 6-10 years before retirement. Should I change my loans to the Direct Loan program and apply for the Public Loan Forgiveness Program? Is there a Program under Sallie Mae that will forgive the balance of my loan when I retire from work?

      • says

        Germaine, if you are in a direct loan then your payments may count. If you are not then you would need to consolidate and then those prior two years will not count. Do you know what type of loans you have?

  4. Vincent Padilla says

    I have been declared totally disabled by Social Security and recently started receiving disability payments. I have received a letter from the SSA stating that they are going to reduce my payments for a 30-year-old student loan. SSA is only paying me $1025 per month and I cannot afford to give any of it up. What can I do about this?

    • says

      Vincent, apply for the income based repayment you will likely qualify for a payment of zero. You can also apply for permanent disability discharge on your loans. Give you lender a call and try to get that done. If you want assistance, give us a call and we can help as well.

      • Monica says

        I have a similar situation as Vincent. I have been off work for over a year on long term disability through my employer. I have had multiple surgeries and recently advised I will not be able to return to work. I am in the process of filing for SSI DISABILITY. At the time of the loan I was single but am currently married. My loan has been in a forbearance for several years. I have been in and out of work for the past 3 years due to illness . My current Ltd income has been reduced to % 60 of gross pay however, if approved for SSI DISABILITY my income will be reduced further and will only be entitled to $1200 a month. (Unfortunately I still have big bills on a lot less money. )
        My question: Will my husband’s income be added in with my social security income to base my student loan monthly payment amount?

  5. Cheri Lockett says

    I owe close to $70,000.00 in student loans. I graduated with my Masters degree in 2007 and about one month after graduation, I had a VP shunt due to Pseudo Tumor Cerebri (which is when your brain acts as if you have a tumor but there is none). One year after that I had a second brain surgery because the first shunt was not working. Then I got my 3 grandchildren through DCFS. I have since adopted these 3 special needs children. Because of their unique set of needs, I am not able to work so the only money I have coming in is the subsidy I get for having the kids. It covers rent, utilities, food, household costs, insurance, gas for the car, etc and I have and round 10.00 left at the end of the month. What help can I get?

    • says

      Hello Cheri. Based on your income you would likely qualify for a zero payment which would last until you have a higher income. Give us a call if you feel like you need some assistance. Our number is 866-921-8053.

  6. destiny says

    yes i owe a little over 10000 in loans and i qualified for the ibr..i understand the part about them paying off my loan lenders and my monthly payments are 0..but exactly what will i have to end up paying the goverment back for paying off my loans?? will it be my whole loan amount that they paid??

    • says

      You would only be forgiven for the balance after 25 years has passed making your qualifying IBR payments. If there is a balance left after 25 years the government will pay it off, but you will get a tax bill for the forgiven amount. How much that will be I do not know, its a question for an accountant. I would estimate somewhere around 25% of the forgiven balance, but its really a guess. It would also depend on your family size, deductions, etc.

      It is possible at that time that new laws will be passed to not make the forgiven portion non-taxable, there is still quite some time to go.

  7. Rose Balboa says

    My daughter reported to me in tears that Sallie Mae has refused to grant her a forbearance for her loans that she borrowed to obtain her Bachelor’s degree. She does not have a job and cannot afford to pay these back. I am a public school teacher who is eligible to retire but cannot do so because of all of this student debt. I am already paying one of her private loans and cannot afford to pay anything else. I just finished paying off MY student loans for my doctoral degree! Does my daughter have any options? Thanks…

    • says

      Rose are here loans private or federal? I know you said one of the loans is private, what about the rest? SM doesn’t have to grant her anything if she qualifies for the IBR program she would have a zero payment until she finds work whether Sallie likes it or not. If her loans are federal, she more than likely qualifies. So I suggest you verify if the loans are federal, and apply for the IBR program. If you need help give us a call we can assist you with everything.

  8. says

    My daughter has loans from a beauty school that she cannot pay. She had an accident her first month at school and has had two surgeries that prevented her from attending critical periods during the school term and was forced to leave school because as a beautician she can no longer stand for the amount of time school demanded or her career choice. We are under severe hardship since we have had to move from our own home due to foreclosure and now the rental for the same reason. my husband and I are separated and I live alone with my daughter who hasn’t been able to land any job and I’m only working a part time because I lost my job in march of last year and have only been at this job 1 month. what should we do?

  9. Michael Roberts says

    I am a financial advisor and have a client who is 30 years with a gross income of less than $3,000 and lives with her parents. If the parents were to claim her as a dependent, would this disqualify her from the income based repayment plans.

  10. Janine says

    I recieve Social Security Disability but as of now my case gets reviewed every three years so my guess is I would not be approved to have my student loans forgiven. My husband and I filed taxes jointly this past year not knowing it would affect anything in regards to helping out my student loan repayment situation. We are now currently separated would his income still play a part in the IBR repayment plan? What if we ended up divorcing this year prior to the new tax season would his income still be taken into consideration for my student loans? We do not have any children together. Thank you greatly for your assistance.

    • says

      When you apply for the IBR you can state that you have had a change of circumstance and that would allow you to show that you are now single, or filing separately. So yes its possible.

  11. Jean says

    My husband has a student loan in default. He is 49 and unemployed. He has in the past had his federal loans consolidated, and after that he defaulted. Now there is a collection agency contacting us. Is he still eligible for any kind of income based repayment plan?

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