Reducing Student Loan Payments Based on Your Low Income

Posted on: August 17, 2021
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What is an Income Driven Repayment Plan (IDR)?

Student loan borrowers may be eligible for reduced monthly payments if:

  • they need to make lower payments OR
  • their federal student loans take a significant portion of their income.

This reduction in the payments is called an Income-driven repayment plan or “IDR”.

Who can apply for reduced monthly payments?

You can apply if you have never applied before or if you are already on an IDR.

What different repayment options are there?

Note:  For the first three plans, discretionary income is the difference between your annual income and 150 percent of the poverty guideline for your family size and for the state that you live in.   More info for your state’s poverty guideline can be found at:

For the ICR plan, discretionary income is the difference between your annual income and 100 percent of the poverty guideline for your family size and state of residence.

  • Revised Pay As You Earn Repayment Plan (REPAYE)
    • This plan generally adjusts monthly payments to 10% of your discretionary income. The payment is based on Adjusted gross income, family size, and total eligible federal student loan balance. This plan only applies to Direct Loans only.
  • Pay as You Earn Repayment Plan (PAYE)
    • This plan is similar to the REPAYE plan and only applies to Direct Loans. But, this plan only applies if you took your first loan on or after October 1, 2007.
  • Income-Based Repayment Plan (IBR)
    • This plan adjusts monthly payments generally to 15% of your discretionary income. This plan is for both the FFEL Program and Direct Loans.  Parent PLUS loan are not eligible
  • Income-Contingent Repayment Plan (ICR)
    • This plan adjusts payments to which of the below is the lower amount:
    • 20% of your discretionary income OR
    • A plan with fixed monthly amount over 12 years which is based on your income

This is the only plan that can be sued for parent PLUS loan borrowers.

For all these plans, you can figure out which could be the best for you with this loan simulator found at:

How do I apply?

The form only takes 10 minutes and must be completed all at once.  Only one application needs to be filled out. Applying is free.  Any company calling to charge you to apply is not part of the U.S. Department of Education (ED) or ED’s Federal Loan Servicers.

To apply, login to your Federal Student Aid (FSA) account and fill out an application here.   If you are already getting this help, login to your FSA account to recertify their income, recalculate their monthly payment due to a change in income or family size, and/or to switch their current plan.

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