Income Contingent Repayment Student Loans – An income-contingent repayment plan (ICR) is one of four income-contingent repayment options for federal student loans. This is the only one of these four options that parent PLUS borrowers can use, which is one of the main advantages of having this type of loan. ICR has the longest payback period of any income oriented plan at 25 years. This allows for lower monthly payments for borrowers, but the total amount paid over the life of the loan, including interest, is usually higher compared to other plans.

The Income-Continued Repayment Plan (ICR) is one of four federal student loan repayment plans that ties your monthly payment to your income and family size. As a category, these four plans are called Income Driven Repayment (IDR) plans. Each of these plans has its own eligibility requirements and repayment terms and conditions, which are determined by the US Department of Education.

Income Contingent Repayment Student Loans

Income Contingent Repayment Student Loans

Income-contingent plans are available for almost every type of federal student loan. In fact, ICR is the only income-driven repayment option for Parent PLUS Loan borrowers, although the loan(s) must first be consolidated into a Direct Consolidation Loan.

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* Federal Stafford Loans (subsidized and unsubsidized), Federal Family Education Loans (FFEL), PLUS Loans, FFEL Consolidation Loans, and Federal Perkins Loans are also eligible for ICR if the borrower first consolidates them into a Direct Consolidation Loan.

If you are a parent PLUS borrower, the biggest benefit of ICR is that you qualify for it! Borrowers with Parent PLUS loans are not eligible for another income-based repayment plan. The ICR allows these borrowers to receive a lower monthly payment than they would have on the 10-year standard repayment plan.

Another advantage of ICR is that if you have a balance remaining at the end of the repayment period (in this case 25 years), you are eligible to have that balance forgiven. This applies to all income-based repayment plans.

Under the ICR, your monthly payment will be 20% of your discretionary income. For some, this will feel like a victory; for others, it may still feel like too much money. Other IDR plans require borrowers to pay only 10%–15% of their discretionary income (5%–10% for the Value Education Savings Plan).

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Perhaps the biggest disadvantage of income-contingent repayment plans is that the total amount you pay over the life of the loan — including interest — is more than you would with other plans, especially the 10-year standard repayment plan.

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Income Contingent Repayment Student Loans

The Department of Education provides income-driven repayment options for federal student loan borrowers. The plans have a lot in common, but there are also some key differences.

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Under the ICR plan, you will have a higher monthly payment than you would with any other income-driven plan. This will be 20% of your discretionary income. Other income-oriented plans only require 10% (or sometimes 15%) of your discretionary income.

ICR also has the longest repayment period. Again, this can be helpful to get a lower payment each month, but it also means you’ll end up paying more in interest over the life of the loan.

Your monthly payment under the ICR or any income-driven repayment plan is a percentage of your discretionary income. This percentage varies from plan to plan, and the way discretionary income is calculated varies by plan.

For an income-contingent payment (ICR), discretionary income is the difference between your annual income and 100% of the poverty guidelines for your family size and state of residence.

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For income-based payment (IBR) and payment according to earnings (PAYE), discretionary income is the difference between your annual income and 150% of the poverty guideline for your family size in your country of residence. For the Saving on a Valuable Education (SAVE)* plan, this is 225% of the poverty line.

If you’re married, your monthly ICR payments will be based on your and your spouse’s combined adjusted gross income and student loan debt, even if you file your taxes separately. This usually results in a higher monthly payment.

The other two income-based plans (the IBR and PAYE plan) do not take into account your spouse’s income or loan debt if you and your spouse file separate income tax returns.

Income Contingent Repayment Student Loans

With all income-based repayment plans, your monthly payment amount may vary from year to year if your income or family size changes. As mentioned, you must recertify your income and family size once a year. This means you need to provide updated income and family size information to your lender so they can recalculate your payment. You are required to do this even if there has been no change in your income or family size.

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If your income or family size changes significantly before your annual certification date, you can submit updated information and ask your servicer to recalculate your payment. It may be helpful to submit updated information if your income decreases or your family size increases.

Since all IDR plans are based on your income and family size, if your income increases, your payment amount will likely increase as well. The idea behind these plans is that you have a monthly student loan payment that is proportional to your income, so if your earning capacity increases, your payment usually increases as well.

The easiest way to apply for an ICR plan or any other IDR plan is online. You can also request a form from your lender.

If you’re not sure which income-driven plan is best for you, ask your lender (the company that manages your loan and payments) to tell you which income-driven plans you qualify for. You can also ask them which income-driven plan will give you the lowest monthly payment if that’s your goal. (Not sure what your goal is? Ask these nine questions!)

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If you’re wondering what loans you have, who’s servicing them, or how much you owe, there’s an easy way to find out. Read our article on how to get information about your federal student loan from NSLDS. Basically, you go into a database (NSLDS) run by (the same place you filed your FAFSA) and run a quick report. Prefer to call by phone? You can call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.

Note that if you have more than one servicer for the loans you want to pay off with an income-driven plan, you must submit a separate request to each servicer.

If you are seeking Public Service Loan (PSLF) forgiveness, you must be enrolled in an income-based repayment plan. This includes an ICR plan. If you’re eligible for PSLF, it’s usually not in your best financial interest to pay more than your minimum monthly payment on your loans. That’s because PSLF is a 10-year (120 monthly payments) program after which your remaining student loan balance is forgiven.

Income Contingent Repayment Student Loans

PSLF is the most famous and popular loan forgiveness program, but it is not the only one. There are other types of student loan forgiveness programs. Each has its own program requirements, and not all require borrowers to be on an income-driven plan.

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For example, the Teacher Loan Forgiveness Program is available to those who teach full-time for five full and consecutive academic years in a low-income elementary school, secondary school, or educational service agency. If you qualify, you can have up to $17,500 of your Direct Loan or FFEL loans forgiven. This program does not require borrowers to be enrolled in a specific payment plan. However, some people qualify for both teacher loan forgiveness and PSLF.

If you’re reading this and thinking that 25 years—or even 20—is too long to wait for loan forgiveness, or that it would be too stressful to manage your loans for two or more decades, you’re not alone! An income-based repayment plan can be a great option for some borrowers, but for others it can feel like another financial stressor you can’t get out of.

If this is the case, you have some other options. Note that these will only help ease your federal student loan payments. If you have private student loans, your options are more limited. Your best bet may be to refinance. (Read about your options in our Guide to Private Student Loans.)

If you’re just going through a tough time and need some financial space, consider asking for a forbearance or deferment. If you’re approved, you can pause your federal student loan payments for up to a year (or longer, but you must reapply each year).

Federal Register :: Improving Income Driven Repayment For The William D. Ford Federal Direct Loan Program And The Federal Family Education Loan (ffel) Program

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