Income-driven Repayment Plans

Income-driven repayment plans are a type of student loan repayment plan that allows borrowers to make payments based on their income and family size. These plans are available for federal student loans, and there are four different types of income-driven repayment plans:

1. Income-Based Repayment (IBR) - This plan limits monthly payments to 10-15% of the borrower's discretionary income and forgives any remaining balance after 20-25 years of qualifying payments.

2. Pay As You Earn (PAYE) - This plan limits monthly payments to 10% of the borrower's discretionary income and forgives any remaining balance after 20 years of qualifying payments. Only borrowers who took out their loans after October 1, 2007, and received a disbursement after October 1, 2011, are eligible for this plan.

3. Revised Pay As You Earn (REPAYE) - This plan limits monthly payments to 10% of the borrower's discretionary income and forgives any remaining balance after 20-25 years of qualifying payments, depending on whether the loans were for undergraduate or graduate studies.

4. Income-Contingent Repayment (ICR) - This plan limits monthly payments to 20% of the borrower's discretionary income or the amount the borrower would pay on a fixed repayment plan over 12 years, whichever is less. Any remaining balance is forgiven after 25 years of qualifying payments.

To enroll in an income-driven repayment plan, borrowers must apply through the Federal Student Aid website and provide information about their income and family size. It's important to note that while these plans can lower monthly payments, they may increase the total amount of interest paid over the life of the loan.