Income-Based Repayment (IBR) is designed to reduce monthly payments to assist with making your student loan debt manageable. If you need to make lower monthly payments, this plan may be for you.
To qualify for IBR, you must have a partial financial hardship. You have a partial financial hardship if the monthly amount you would be required to pay on your IBR-eligible federal student loans under a 10-year Standard Repayment Plan is higher than the monthly amount you would be required to repay under IBR. Your payment amount may increase or decrease each year based on your income and family size. Once you've initially qualified for IBR, you may continue to make payments under the plan even if you later no longer have a partial financial hardship.
Eligible Federal Loans
The following loans from the William D. Ford Federal Direct Loan (Direct Loan) Program and the Federal Family Education Loan (FFEL) Program are eligible for IBR:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans made to graduate or professional students
- Direct Consolidation Loans without underlying PLUS loans made to parents
- Subsidized Federal Stafford Loans
- Unsubsidized Federal Stafford Loans
- FFEL PLUS Loans made to graduate or professional students
- FFEL Consolidation Loans without underlying PLUS loans made to parents
Loans That Are Not Eligible
The following loans are not eligibile for repayment under IBR:
- PLUS loans made to parents
- Consolidation Loans that include underlying PLUS loans made to parents
- Private education loans
Under this plan, your monthly payments are
- based on your income and family size;
- adjusted each year, based on changes to your annual income and family size;
- usually lower than they are under other plans;
- never more than the 10-year standard repayment amount; and
- made over a period of 25 years.
Advantages of IBR
- Pay based on what you earn—Under IBR, your monthly payment amount will be 15 percent of your discretionary income, will never be more than the amount you would be required to pay under the 10-year Standard Repayment Plan, and may be less than under other repayment plans.
- Interest payment benefit—If your monthly IBR payment amount doesn’t cover the interest that accrues (accumulates) on your loans each month, the government will pay your unpaid accrued interest on your Direct Subsidized Loans or Subsidized Federal Stafford Loans (and on the subsidized portion of your Direct or FFEL Consolidation Loans) for up to three consecutive years from the date you began repaying your loan under IBR.
- Limitation on the capitalization of interest—While you have a partial financial hardship, interest that accrues but is not covered by your loan payments will not be capitalized, even if interest accrues during a deferment or forbearance.
- 25-year forgiveness—If you repay under IBR and meet certain other requirements, any remaining balance will be forgiven after 25 years of qualifying repayment.
- 10-year public service loan forgiveness—If, while you are employed full-time for a public service organization, you make 120 on-time, full monthly payments under IBR (or certain other repayment plans) you may be eligible to receive forgiveness of the remaining balance of your Direct Loans through the Public Service Loan Forgiveness Program.
Disadvantages of IBR
- You may pay more interest—A reduced monthly payment in IBR generally means you’ll be repaying your loan for a longer period of time, so you may pay more total interest over the life of the loan than you would under other repayment plans.
- You must submit annual documentation—To set your payment amount each year, your loan servicer, the organization that handles billing and other services for your loan, needs updated information about your income and family size. You must provide the documentation or your monthly payment amount will be changed to the amount you would be required to pay under the 10-year Standard Repayment Plan, based on the amount you owed when you began repaying under IBR, and will no longer be based on your income. This amount will be higher than your prior IBR payment that was based on your income. If you do not provide the required income documentation, unpaid interest will also capitalize.
- You may have to pay taxes on any loan amount that is forgiven after 25 years.
Using the Repayment Estimator to See How Much You’d Pay Under IBR
Your loan servicer, the company that handles the billing and other services on your federal student loan, can help you choose a loan repayment plan that’s best for you. Before you contact your loan servicer to discuss repayment plans, you can use our Repayment Estimator to get an early look at which plans you may be eligible for and see estimates for how much you would pay monthly and overall.
Tools and Resources for IBR
Want more detailed information about IBR?
- Download the IBR fact sheet.
- Browse the IBR Questions and Answers (Q&As). Q&As are grouped into six categories:
- General Information
- Eligible Loans
- Determination of IBR Monthly Payment Amount
- Married Borrowers
- Application Process
- Other Information
Want to Apply for IBR?
Contact your loan servicer before you apply for IBR. Your loan servicer will answer your questions about the IBR plan and help you to decide whether IBR is the right plan for your situation.
If you are ready to apply for IBR, go to StudentLoans.gov, sign in, and complete the electronic Income-Based (IBR)/Pay As You Earn/Income-Contingent (ICR) Repayment Plan Request.
Need Help Repaying Your Student Loans?
If IBR is not right for you, contact your loan servicer to discuss other repayment options. You may be able to change your repayment plan to one that will allow you to have a longer repayment period. Also ask your loan servicer about your options for a deferment or forbearance or loan consolidation.