What is income-driven repayment for student loans?

Income-driven repayment (IDR) is a federal repayment option that caps your monthly student loan payment at a percentage of your discretionary income — typically 10–20%. After 20–25 years of qualifying payments, any remaining balance is forgiven.

How income-driven repayment works

On an IDR plan, your monthly federal student loan payment is based on your income and family size rather than your total balance. Payments are recalculated annually when you recertify. If your income drops significantly, your payment can drop to $0 — and $0 payments still count toward forgiveness. Apply for free at StudentAid.gov/idr.

The IDR plans

Income-Based Repayment (IBR): Payments capped at 10% of discretionary income (newer borrowers) or 15% (earlier borrowers); forgiveness after 20 or 25 years.
Pay As You Earn (PAYE): Payments capped at 10% of discretionary income; forgiveness after 20 years.
Income-Contingent Repayment (ICR): Payments capped at 20% of discretionary income or a 12-year fixed-equivalent; forgiveness after 25 years. The only IDR plan available to Parent PLUS borrowers (after consolidation).

Discretionary income

For IBR and PAYE, discretionary income is the difference between your Adjusted Gross Income and 150% of the federal poverty guideline for your family size; for ICR, 100% of the poverty line. Your servicer calculates this when you submit your IDR application. See the definition at StudentAid.gov.

Forgiveness at the end

After completing the full repayment period (20 or 25 years), any remaining balance is forgiven. Forgiven amounts may be taxable under current law — consult a tax advisor. For public-service workers, PSLF can forgive your balance after 10 years (120 qualifying payments) while on an IDR plan.

IDR by the numbers

On IBR, monthly payments are capped at 10% of discretionary income for newer borrowers or 15% for earlier borrowers. — Federal Student Aid — IDR Plans
On PAYE, monthly payments are capped at 10% of discretionary income, with forgiveness after 20 years. — Federal Student Aid
IDR plan availability and terms are administered by the U.S. Department of Education and subject to change by regulation or court order. — Federal Student Aid

Key takeaways

IDR caps your monthly payment at 10–20% of discretionary income, not your balance.
Plans include IBR, PAYE, and ICR; terms are set by the Department of Education and can change.
Payments recertify annually; if income drops, your payment drops.
Remaining balances are forgiven after 20–25 years (or 10 years if you qualify for PSLF).