Income-Contingent Repayment: Is It Best for You?

Editor's note, Jan. 3, 2025: I CR reopened for new enrollment in late December 2024. Borrowers who switch from SAVE to ICR or another income-driven repayment plan (like PAYE) will resume earning credit toward Public Service Loan Forgiveness or income-driven repayment forgiveness.

The Education Department previously limited new ICR enrollment on July 1, 2024. However, lawsuits temporarily blocked the SAVE repayment plan over the summer, leaving 8 million borrowers with an interest-free payment pause. SAVE borrowers are not earning forgiveness credit for months spent in the pause.

Expect application processing delays. More information is available on ED.gov/SAVE.

The Income-Contingent Repayment (ICR) plan costs more each month than other income-driven student loan repayment plans offered by the federal government. ICR caps monthly payments at 20% of your discretionary income and lasts 25 years before you can get your remaining debt forgiven. Still, this plan may be your best income-driven choice in the following instances:

You have parent PLUS loans or a consolidation loan that includes parent PLUS loans.
You want slightly lower payments to potentially pay less interest.

» MORE: PAYE and ICR reopened in December. Should you enroll?

ICR at a glance

Repayment length: 25 years.
Payment amounts: 20% of your discretionary income or fixed payments based on a 12-year loan term, whichever is lower.
Other qualifications: Must have federal direct loans. Parent PLUS loans must be consolidated into a direct loan to be eligible.
Best for: Parent borrowers; those seeking slightly lower payments.

» MORE: Is income-driven repayment right for you?

ICR vs. other income-driven plans

All income-driven repayment plans share some similarities. Each caps payments to between 10% and 20% of your discretionary income and forgives your remaining loan balance after 20 or 25 years of payments.

If you're eligible for Public Service Loan Forgiveness, you can get your remaining debt forgiven after just 10 years in an income-driven plan. Use the Education Department’s student loan simulator to see how much you might pay under different plans.

ICR is the only income-driven plan available for parent PLUS loans. Before signing up for the plan, parent PLUS borrowers must first consolidate the student loan into a federal direct loan.

» MORE: How are income-driven payments calculated?

If ICR doesn't sound right for you, consider one of the other three income-driven repayment plans: Saving on a Valuable Education (SAVE), Pay as You Earn (PAYE) or Income-Based Repayment (IBR).

» MORE: How to get income-driven repayment plan forgiveness

Not sure which income-driven plan to select? Consider asking your servicer to place you on the plan you qualify for with the lowest monthly payment. But specifically choosing Income-Contingent Repayment may be right for you in the following instances:

You have parent PLUS loans

Income-Contingent Repayment is the only income-driven plan open to all federal direct loan borrowers — including those with parent PLUS loans or consolidation loans that include parent PLUS loans. To qualify, parent PLUS borrowers must first consolidate their student loans, if they haven’t already. You can do this for free at studentaid.gov.

» MORE: Parent PLUS loan repayment options

You want slightly lower payments

Payments on income-contingent repayment can be a nice middle ground between standard repayment and other income-driven plans. Your bills won’t be so high that you can’t afford them — as they could be on the standard plan — and won’t be too low that interest piles up.

Because payments on ICR are higher than on other income-driven plans, you’ll tackle more of the interest as it accrues. You’ll also minimize any future costs should you get forgiveness under ICR, as the forgiven amount would be taxable.

If minimizing interest accrual is your goal, consider SAVE instead. SAVE offers subsidies on unpaid interest that ICR doesn’t, and you can always pay extra each month to make a greater dent in what you owe. But if you don’t think you’ll stick with making those extra payments, ICR may make more sense for you.

» MORE: The new income-driven repayment plan: how ‘SAVE’ works

How to apply for ICR

You must actively enroll in Income-Contingent Repayment. You can do this by mailing a completed income-driven repayment request to your student loan servicer, or complete the process online. You can change your student loan repayment plan at any time.

Visit studentaid.gov. Log in with your Federal Student Aid ID, or create an FSA ID if you don’t have one.
Select income-driven repayment plan request. Preview the form so you know what documents to have ready, like your tax return.
Choose your plan. If you qualify for more than one income-driven repayment plan, you can be automatically placed in the plan with the lowest payment or specifically choose ICR if it makes the most sense for you.
Complete the application. Enter the required details about your income and family. Remember to include your spouse’s information, if applicable, as it will affect your payments under ICR.

» MORE: How to submit an income-driven repayment application

You can temporarily self-report income

Borrowers can self-report their income. That means you don't have to submit tax documentation when you report your income. This can be completed online when you submit the IDR application.

Recertify your information to stay on ICR

To stay on the Income-Contingent Repayment plan, you must resubmit the income-driven repayment application every year. If your income changes, your payments will change, too. If you miss the recertification deadline, your payments will switch to the amount you'd pay under the standard plan.

If you gave consent during the application process for your tax information to be accessed, your recertification will automatically renew. You will receive notice before a new payment amount goes into effect.

» MORE: How to recertify income-based repayment

Other ways to pay less

If income-driven repayment isn't right for you, the federal government offers extended repayment and graduated repayment plans, which lower your payments but aren’t based on your income. You may pay more interest under these plans, though, and neither offers loan forgiveness.

You also may be able to pay less by refinancing your student loans. Refinancing federal student loans can be risky, as you’ll lose access to income-driven repayment and other federal loan programs and protections. But if you’re comfortable giving up those options and have strong credit as well as a steady income, refinancing may save you money.

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