Income-Based Repayment (IBR) is one of several repayment plan options for borrowers of student loans made under the William D. Ford Federal Direct Loan (Direct Loan) Program or the Federal Family Education Loan (FFEL) Program. If you qualify for IBR, your required monthly payment will be capped at an amount that is intended to be affordable based on your income and family size, and will be less than what you would have to pay under a 10-year Standard Repayment Plan.
In addition to making your monthly loan payments more affordable, the IBR Plan offers other benefits:
- If your IBR payment amount does not cover the full amount of interest that accrues on your loans each month, the government will pay any unpaid, accrued interest on your subsidized loans for up to three consecutive years from the date you begin repaying the loans under IBR. (You are responsible for paying the interest that accrues on your unsubsidized loans during this three-year period.)
- If you repay under IBR and meet certain other requirements, any remaining loan balance that you owe will be canceled after 25 years.
- Payments that you make under IBR count toward the 120 payments that are required for the Direct Loan Public Service Loan Forgiveness (PSLF) Program.
While both Income-Based Repayment (IBR) and Income Contingent Repayment (ICR) are are intended to provide borrowers with an affordable monthly payment amount based on income and family size, and both forgive any remaining balance after 25 years, there are still differences between the two:
- IBR is available under both the FFEL and Direct Loan programs. ICR is available only under the Direct Loan Program.
- To initially qualify for IBR, you must have a “partial financial hardship” as described in Q&A #4. There is no comparable requirement for ICR. Any Direct Loan borrower (other than a parent PLUS borrower) may choose ICR.
- The amount of your loan debt is not considered in determining your IBR payment amount during any period when you have a “partial financial hardship”. Your monthly IBR payment amount is determined based only on your income and family size. In contrast, the monthly payment under ICR takes into account your total Direct Loan debt in addition to income and family size. The required monthly payment under ICR is generally higher than under IBR, and in some cases it may be higher than the monthly payment amount under a 10-year standard repayment plan.
- With both IBR and ICR, your calculated monthly payment may not cover the full amount of interest that accrues on your loans each month. Under IBR, the government pays the remaining unpaid accrued interest on your subsidized loans for up to three consecutive years from the date you begin repaying the loans under IBR. This benefit is not available under ICR. Under ICR, you are responsible for paying all of the interest that accrues on your loans.
- Under IBR, unpaid interest is capitalized (added to your loan principal balance) only if you are determined to no longer have a “partial financial hardship,” or if you choose to leave the IBR Plan. Under ICR, unpaid interest is capitalized annually.
Federal student loans are eligible to be repaid under an IBR plan:
All Stafford, PLUS and Consolidation Loans made under either the Direct Loan or FFEL Program are eligible for repayment under IBR, EXCEPT loans that are currently in default, parent PLUS Loans (PLUS Loans that were made to parent borrowers), or Consolidation Loans that repaid parent PLUS Loans. The loans can be new or old, and for any type of education (undergraduate, graduate, professional, job training).
Applying for IBR
For information about and to apply for IBR, contact the servicer(s) of your student loans. If you are not sure who your loan servicer is or would like more information about your loans, you can look it up. To see a list of and contact information for Federal Student Aid servicers for the Direct Loan Program and for FFEL Program Loans purchased by the U.S. Department of Education, go to the Loan Servicer page.
Get more details on Income-Based Repayment (pdf file)