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. 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.

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