Income-Contingent Repayment Plan (ICR) is an income-driven federal student loan repayment plan which sets the borrower’s monthly student loan payment at an affordable amount based on the borrower’s income and family size.
What Federal Student Loans are Eligible for ICR?
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans made to graduate or professional students
- Direct PLUS Loans made to parents – Eligible if consolidated*
- Direct Consolidation Loans that did not repay any PLUS loans made to parents
- Direct Consolidation Loans that repaid PLUS loans made to parents
- Subsidized Federal Stafford Loans (from the FFEL Program) – Eligible if consolidated*
- Unsubsidized Federal Stafford Loans (from the FFEL Program) – Eligible if consolidated*
- FFEL PLUS Loans made to graduate or professional students – Eligible if consolidated*
- FFEL PLUS Loans made to parents – Eligible if consolidated*
- FFEL Consolidation Loans that did not repay any PLUS loans made to parents- Eligible if consolidated*
- FFEL Consolidation Loans that repaid PLUS loans made to parents – Eligible if consolidated*
- Federal Perkins Loans – Eligible if consolidated*[i]
Only federal student loans can be repaid under the ICR. Private student loans are not eligible.
How are Monthly Payments Payment Amounts Calculated?
Under ICR, the monthly payment is based upon the lesser of the following:
- 20 percent of the borrower’s discretionary income; or
- What the borrower would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to the borrower’s income.
How Long is the ICR Plan?
Under ICR, the repayment period is 25-years. If at the end of the 25-year repayment period there is any remaining unpaid loan balance, that loan balance will be forgiven.
If the borrower is making payments under ICR and also working toward loan forgiveness under the Public Service Loan Forgiveness (PSLF) Program, the borrower may qualify for forgiveness of any remaining loan balance after only 10-years of qualifying payments, instead 25 years.
Will Payment Remain the Same Amount for the Life of the Income-Driven Repayment Plan?
No, under each ICR the borrower is required “recertify” his or her income and family size each year. This means that the borrower must provide the loan servicer with updated income and family size information so that the loan servicer can recalculate the ICR eligibility and payment amount. The borrower must do this even if there has been no change in income or family size.
Although recertification is only required once each year, if the borrower’s income or family size changes significantly before the annual certification date (for example, due to loss of employment), the borrower can submit updated information and ask the loan servicer to recalculate the payment amount at any time. The borrower is not required to report changes in his or her financial circumstances before the annual recertification date. The borrower can wait until the recertification date to report an increase income.
If the borrower does not recertify by the annual deadline, the borrower will remain on ICR plan, but the monthly payment will no longer be based on income. Instead, the required monthly payment amount will be the amount the borrower would pay under a Standard Repayment Plan with a 10-year repayment period, based on the loan amount the borrower owed when he or she initially entered the income-driven repayment plan.
If the borrower does not recertify his or her family size each year, the borrower will remain on the same repayment plan, but the loan servicer will assume that the borrower has a family size of one.
Eligibility for ICR
Any borrower with eligible federal student loans can
make payments under ICR. This plan
is the only available income-driven repayment option for parent PLUS loan
borrowers. Although PLUS loans made to parents cannot be repaid under
any of the income-driven repayment plans (including the ICR Plan), parent
borrowers may consolidate their Direct PLUS Loans or Federal PLUS Loans into a
Direct Consolidation Loan and then repay the new consolidation loan under the
ICR Plan (though not under any other income-driven plan).
[i] *“eligible if consolidated,” means that if the borrower consolidates that loan type into a Direct Consolidation Loan, the borrower can then repay the consolidation loan under the income-driven plan. However, if the borrower consolidates a FFEL Program Loan or Federal Perkins Loan into a Direct Consolidation Loan, the borrower may then be able to repay the Direct Consolidation Loan under the REPAYE, PAYE, and ICR Plan (depending on the type of loan consolidated).