The four income-driven repayment plans for federal student loans differ in payment percentages, eligibility rules, and forgiveness timelines. Here’s how IBR, PAYE, ICR, and the new RAP plan compare — and which one fits your situation.
Federal student loans offer four income-driven repayment tracks in 2026: IBR (10% or 15% of discretionary income), PAYE (10%, for eligible borrowers), ICR (20% or a fixed 12-year amount — whichever is less), and the new Repayment Assistance Plan (RAP, 1%–10% of AGI with interest and principal protections). All four lead to loan forgiveness after 20–30 years and all four count toward PSLF. The right plan depends on when you borrowed, your loan type, your income, and whether you’re on a forgiveness track.
Income-driven repayment (IDR) lets federal student loan borrowers tie their monthly payment to their income rather than to their loan balance. If your payment doesn’t fully cover accruing interest, you still build toward forgiveness at the end of your repayment term. Four plans are active in 2026 — Income-Based Repayment (IBR), Pay As You Earn (PAYE), Income-Contingent Repayment (ICR), and the new Repayment Assistance Plan (RAP) — plus a fifth non-income-driven option, the Tiered Standard Plan. All four IDR plans count toward Public Service Loan Forgiveness.
Choosing deliberately matters: the plan you pick determines your monthly payment, whether your balance grows or shrinks, and when you reach forgiveness. Auto-enrollment into the wrong plan can mean years of higher-than-necessary payments.
IBR, PAYE, and ICR base your payment on a percentage of your *discretionary income* — defined as your adjusted gross income (AGI) minus 150% of the federal poverty guidelines published annually by HHS for your family size and state of residence.
If your AGI is $50,000 and you are single, the 2026 150% poverty level for a household of one in the continental U.S. is approximately $22,590. Your discretionary income is $50,000 − $22,590 = $27,410. IBR at 10% produces a monthly payment of roughly $228.
Your servicer recalculates your payment every year based on your most recent tax return or income documentation. If your income drops, your payment drops. If it rises enough that your IDR payment would exceed the Standard 10-year repayment amount, your payment is capped at the Standard-plan level.
IBR is the most broadly available IDR plan. All four income-driven plans, including both IBR tracks, are described in the Federal Student Aid official overview. IBR comes in two tracks based on when you first borrowed.
New-borrower IBR (first loan disbursed on or after July 1, 2014): - Monthly payment: 10% of discretionary income - Forgiveness: 20 years
Original IBR (all other borrowers): - Monthly payment: 15% of discretionary income - Forgiveness: 25 years
Both tracks require a "partial financial hardship" — your calculated IBR payment must be lower than what you’d pay on a Standard 10-year repayment plan. IBR is authorized under 20 U.S.C. §1098e, which sets the statutory framework for eligibility, payment percentages, and forgiveness timelines for both tracks.
IBR covers most federal Direct Loans and FFEL loans. Parent PLUS loans are not eligible.
PAYE offers the same 10% payment cap and 20-year forgiveness as new-borrower IBR, but with narrower eligibility.
Eligibility requires all three: - You had no outstanding federal student loans on October 1, 2007 (a "new borrower") - You received a disbursement of a Direct Loan on or after October 1, 2011 - You have a partial financial hardship (calculated payment lower than your Standard 10-year amount)
If you don’t meet all three criteria, PAYE is unavailable — but new-borrower IBR may be, at the same 10% rate.
PAYE includes a three-year interest benefit on subsidized loans: if your payment doesn’t cover the interest accruing on subsidized loans, the government waives that unpaid interest for the first three years. This protects borrowers entering repayment at low income from rapid balance growth early in their career.
ICR is the oldest income-driven plan, created in 1994, and the most accessible — there is no hardship requirement. The tradeoff is a higher payment ceiling.
That last point makes ICR unique. Parent PLUS loans cannot directly enroll in IBR, PAYE, or RAP — but if you consolidate PLUS loans into a Direct Consolidation Loan, the resulting loan is eligible for ICR. For parents carrying PLUS balances who want income-sensitive payments, ICR through consolidation is the only pathway.
Because ICR’s payment cap (20%) is higher than IBR’s or PAYE’s (10%), borrowers who qualify for those plans typically pay less monthly. ICR’s PSLF qualification still makes it relevant for Parent PLUS borrowers in public service.
RAP launched July 1, 2026 as the successor to the SAVE Plan, which was wound down under the same 2025 budget reconciliation law. RAP uses a different payment formula than the other three IDR plans.
Payment: a percentage of your AGI — not discretionary income — on a sliding scale: - 1% of AGI for income at or below $10,000 - Increases by 1 percentage point for each additional $10,000 of AGI - Maximum: 10% of AGI
Additional protections: - Minimum payment: $10/month regardless of income - Dependent reduction: $50/month per dependent claimed on your tax return - Interest waiver: if your payment doesn’t cover the interest accruing that month, the unpaid interest is waived — not added to your balance - Principal protection: if your payment doesn’t reduce your balance by at least $50, a government subsidy covers the difference — your principal drops by at least $50 every month - Term: 30 years - Not eligible: Parent PLUS loans and consolidation loans that include a Parent PLUS loan
For low-income borrowers with large balances, RAP’s 1% floor often produces a lower payment than IBR or PAYE. The interest waiver and minimum principal reduction eliminate the balance-growth problem that left many SAVE borrowers with growing balances during the court-ordered forbearance period.
For the full context on the SAVE Plan wind-down and what the 7.5 million SAVE borrowers need to do before their 90-day servicer deadline, see our SAVE Plan transition guide.
| Feature | IBR (new borrowers) | IBR (original) | PAYE | ICR | RAP | |---|---|---|---|---|---| | Payment | 10% discretionary | 15% discretionary | 10% discretionary | 20% discretionary or 12-yr fixed (lesser) | 1%–10% of AGI | | Forgiveness | 20 years | 25 years | 20 years | 25 years | 30 years | | Hardship required | Yes | Yes | Yes | No | No | | Parent PLUS eligible | No | No | No | Via consolidation | No | | PSLF-qualifying | Yes | Yes | Yes | Yes | Yes | | Interest protection | None (payment cap) | None (payment cap) | 3-yr subsidy on subsidized | None | Full monthly waiver |
All four IDR plans — IBR, PAYE, ICR, and RAP — count as qualifying repayment plans for Public Service Loan Forgiveness. The Tiered Standard Plan is not income-driven and does not count.
If you’re pursuing PSLF, your plan choice affects your monthly out-of-pocket cost, not whether your payments qualify. A lower IDR payment on the path to PSLF means less total paid before the remaining balance is forgiven tax-free after 120 qualifying payments.
PSLF forgiveness is excluded from gross income under 26 U.S.C. §108(f) and is tax-free.
IDR forgiveness at the end of your repayment term (year 20, 25, or 30) has historically been treated as taxable income in the year the balance is discharged. The American Rescue Plan Act’s temporary exclusion of IDR forgiveness from income ran through 2025 and has since expired. Verify current IRS guidance before building any long-term financial projection that assumes IDR forgiveness is tax-free — this area of law has changed multiple times.
1. Confirm your loan types at studentaid.gov. Parent PLUS borrowers have a narrower set of options and should understand the ICR-via-consolidation pathway before making changes. 2. Run the loan simulator at StudentAid.gov to compare estimated monthly payments across IBR, PAYE, ICR, and RAP for your actual income, family size, and loan balance. 3. Check PSLF eligibility. If you’re employed by a government agency or 501(c)(3) nonprofit, enrolling in a qualifying IDR plan is the path to 10-year tax-free forgiveness. 4. Don’t auto-enroll by default. SAVE borrowers receiving 90-day servicer notices should choose deliberately — the auto-enrollment default is typically a higher payment than a deliberate IDR selection.
For context on how current federal student loan interest rates for 2026–2027 affect your total cost under each plan, see our rate guide. The interest rate you’re carrying today determines how much of each IDR payment goes to interest vs. principal — which directly affects your balance trajectory toward forgiveness.
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*ClearValue Lending is a financial-education and comparison platform — not a student loan lender, servicer, or financial advisor. This article summarizes publicly available federal repayment-plan information as of July 2026; eligibility rules, payment formulas, and program terms can change. Always verify your options with your loan servicer and the official federal resources at studentaid.gov before making any decision about your repayment plan.*
Both new-borrower IBR and PAYE cap your monthly payment at 10% of discretionary income and lead to forgiveness after 20 years. The difference is eligibility: PAYE is restricted to borrowers who had no outstanding federal loans on October 1, 2007 and received a new Direct Loan disbursement on or after October 1, 2011, and have a partial financial hardship. New-borrower IBR is available to a broader pool (including FFEL loan holders) and may be accessible when PAYE is not. PAYE also provides a three-year interest subsidy on subsidized loans — unpaid interest is waived rather than capitalized — which IBR does not.
Yes — IBR, PAYE, ICR, and RAP all count as qualifying repayment plans for PSLF. The Tiered Standard Plan (the other new 2026 option) is a fixed-payment plan, not income-driven, and does not count toward PSLF. If you are working toward 120 qualifying payments, confirm enrollment in one of the four IDR plans before making payments you intend to credit toward PSLF.
Not directly. Parent PLUS loans are ineligible for IBR, PAYE, and RAP. However, if you consolidate PLUS loans into a Direct Consolidation Loan, the resulting consolidation loan is eligible for ICR — the only income-driven option for consolidated Parent PLUS borrowers. Confirm with your servicer whether consolidation affects any PSLF credits you have already accumulated before making that change.
It depends on which program applies. PSLF forgiveness — after 120 qualifying payments — is excluded from gross income under federal law and is tax-free. IDR forgiveness at the end of your repayment term (year 20, 25, or 30) has historically been treated as taxable income in the year the balance is discharged. The American Rescue Plan Act temporarily excluded IDR forgiveness from income through 2025; that exclusion has expired. Verify current IRS guidance before building any projection that assumes long-term IDR forgiveness is tax-free — this area has changed repeatedly.
Generally yes. You can request a plan change through your servicer at any time. Switching between qualifying IDR plans does not reset your PSLF payment count — payments made on any qualifying plan accumulate toward 120 total. If you switch to a non-qualifying plan (such as the Tiered Standard Plan) and later switch back, only payments made on qualifying plans count toward PSLF. Confirm any switch with your servicer before making payments you intend to credit.