Federal Student Loans

Income-Driven Repayment Options

Income-Driven Repayment (IBR)

Income-Based Repayment (IBR) is the most popular of the income-driven plans. Payments are set at 15% of your adjusted gross income (10% for newer borrowers) above a minimum threshold and adjust annually for up to 25 years (20 years for newer borrowers). The unpaid balance is wiped out at the end of the repayment period.

Married borrowers who file separate tax returns use only their income for calculation of payment amounts due. The minimum income threshold, which is calculated based on family size, will include your spouse even if you file separate tax returns.

All federal student loans are eligible for IBR except for Parent PLUS Loans and Direct Consolidation Loans that include a Parent PLUS Loan.

Revised Pay-As-You-Earn (REPAYE)

Revised Pay-As-You-Earn (REPAYE) sets payments at 10% of your adjusted gross income above a certain level and adjusts annually for up to 20 years (25 years if you owe student loans for graduate school). The unpaid balance is wiped out at the end of the repayment period.

Married borrowers who file separate tax returns use only their income for calculation of payment amounts due. The minimum income threshold, which is calculated based on family size, will include your spouse even if you file separate tax returns.

You must be a new borrower on or after Oct. 1, 2007, and must have received a disbursement of a direct loan on or after Oct. 1, 2011 to qualify. You must also have an adjusted gross income below a certain threshold to be able to enter REPAYE.

Only federal student loans issued under the direct loans program are eligible for REPAYE, with the exception of Parent PLUS Loans and Direct Consolidation Loans that include a Parent PLUS Loan.

Pay-As-You-Earn (PAYE)

Pay-As-You-Earn (PAYE) sets payments at 10% of your adjusted gross income above a certain level and adjusts annually for up to 20 years. The unpaid balance is wiped out at the end of the repayment period.

Married borrowers who file separate tax returns use only their income for calculation of payment amounts due. The minimum income threshold, which is calculated based on family size, will include your spouse even if you file separate tax returns.

You must be a new borrower on or after Oct. 1, 2007, and must have received a disbursement of a direct loan on or after Oct. 1, 2011 to qualify. You must also have an adjusted gross income below a certain threshold to be able to enter PAYE.

Only federal student loans issued under the direct loans program are eligible for PAYE, with the exception of Parent PLUS Loans and Direct Consolidation Loans that include a Parent PLUS Loan.

Income-Contingent Repayment (ICR)

Income-Contingent Repayment (ICR) is the original income-driven repayment plan. Your payments are calculated using a complex formula and adjust each year for a maximum period of 25 years. At the end of 25 years, your unpaid balance is wiped out.

Married borrowers who file separate tax returns use only their income for calculation of payment amounts due.

ICR isn't used very often, as other income-driven repayment plans result in lower payments. The only major benefit to ICR is that it is the only income-driven repayment plan that can be used for Parent PLUS Loans.

None of the federal student loan repayment plans apply to private student loans. Repayment options are subject to the policies of the private bank, servicer, collection agency or attorney. That is why it is so critical to identify, early on, which loans are federal and which are private.

Contact San Diego Bankruptcy Attorney Chis Bush

Call (619) 678-1134 for answers to your specific questions about Federal Student Loan Debt and how Chapter 7 bankruptcy or Chapter 13 debt reorganization can help improve your financial situation.