Income-Driven Repayment (IDR) is a category of federal student loan repayment plans under which a borrower has the right to pay a certain percentage of their discretionary income, as calculated according to a Department of Education formula, towards their federal student loans.

 

There are many kinds of IDR plans, each with different rules, including:

  • Income-Based Repayment (IBR),

  • Income Contingent Repayment (ICR),

  • Revised Pay as you Earn (REPAYE), and

  • Pay as You Earn (PAYE)
     

Under these plans, borrowers are entitled to cancellation after 20 or 25 years of qualifying payments, depending on the plan. Plan eligibility is based on loan type and date when the loan was taken out.

IDR Plan Table:

Repayment Plan
Eligible Borrower Loan Dates
Repayment Formula*
Cancellation Period
Eligible Loans
Parent PLUS?
ICR Plan
All
Lesser of: ● 20% of discretionary income; or ● Based upon a 12-year amortization schedule, adjusted according to income
25 years
Direct Loans only
No, unless consolidated
Revised Pay As You Earn (REPAYE)
All
10% of discretionary income
20 years for borrowers with loans for undergraduate study only; 25 years for borrowers with at least one loan for graduate study
Direct Loans only
No
Pay As You Earn (PAYE)
New borrowers on or after Oct. 1, 2007, who received a disbursement on or after Oct. 1, 2011
Lesser of: ● 10% of discretionary income; or ● 10-year Standard Plan amount
20 years
Direct Loans only
No
IBR after July 1, 2014
New borrowers on or after July 1, 2014
Lesser of: ● 10% of discretionary income; or ● 10-year Standard Plan amount
20 years
Direct Loans only**
No
IBR before July 1, 2014
Borrowed before July 1, 2014
Lesser of: ● 15% of discretionary; or ● 10-year Standard Plan amount income
25 years
Both Direct and FFEL
No

* For all of the plans, except ICR, “discretionary income” is the adjusted gross income above 150% of the Department of Health and Human Services’ (HHS) federal poverty guideline for the borrower’s household size. For ICR, discretionary income is income above 100% of federal poverty for the borrower’s household size.
 

** There is no express prohibition on FFELs; however, because the FFEL program ended in 2010, there were no new FFEL borrowers in 2014.

 

Source: The National Consumer Law Center

 

You can apply for such a plan through your loan servicer or through federal student aid. See this website for further information: https://studentaid.gov/manage-loans/repayment/plans/income-driven.

The IDR Account Adjustment

In April 2022, the Department of Education announced that it would conduct a one-time revision of all borrowers’ student loan accounts. For many borrowers, this audit will be automatic and will give borrowers more credit toward cancellation under IDR plans, regardless of whether or not they have been enrolled in IDR plans.

Any months in which a borrower had time in a repayment status, regardless of the payments made, loan type, and repayment plan will be counted toward IDR cancellation. The Department of Education will also count the following as “qualifying repayment status”:
 

  • 12 or more months of consecutive forbearance (meaning unbroken)
     

  • 36 or more months of cumulative forbearance (meaning added up, regardless of breaks in time) 
     

  • Any months spent in deferment (with the exception of in-school deferment) prior to 2013; and
     

  • Any time in repayment prior to consolidation on consolidated loans.
     

Borrowers may have additional forbearance and deferment time counted if they submit a complaint to the U.S. Department of Education’s Office of Federal Student Aid at https://studentaid.gov/feedback-center.

Illustration of a person typing on a laptop with a calculator, coins and dollar sign, and papers floating behind them (representative of someone accessing the IDR Account Adjustment)

How Does the IDR Account Adjustment Affect Borrowers?

For direct loan borrowers with at least 20 or 25 years (see above) of qualifying time following the audit:
These borrowers do not need to enroll in IDR to get cancellation. Any borrower with loans that have accumulated time in repayment of at least 20 or 25 years—depending on loan type and which IDR plan they are thereby eligible for—will see automatic cancellation, even if they are not currently on an IDR plan. If a borrower has made qualifying payments that exceed cancellation thresholds (20 or 25 years), they will receive a refund for overpayment.

For direct loan borrowers with less than 20 or 25 years of repayment history who are NOT currently enrolled on an IDR plan: 
These borrowers will eventually need to enroll in an IDR plan to obtain cancellation, but will receive credits towards cancellation automatically.

For direct loan borrowers with less than 20 or 25 years of repayment history who are currently enrolled on an IDR plan:
These borrowers should automatically receive credit towards IDR loan cancellation.

For borrowers with FFEL loans:
If a borrower has commercially held FFEL loans, they can only benefit from the IDR account adjustment—either to receive total cancellation or credit towards cancellation—if they consolidate before May 1, 2023.

In addition to issuing new guidance to student loan servicers to ensure accurate and uniform payment counting practices, the U.S. Department of Education will track payment counts in its modernized data systems and is undertaking an effort to display borrower IDR payment counts on StudentAid.gov so that borrowers can view their progress.

Public Service Loan Cancellation & the IDR Account Adjustment: 

This audit will also affect the accounts of all borrowers, including those who have already applied for PSLF, or those who are planning to apply for PSLF:

  • IDR account adjustments count towards PSLF credit.

  • If you have 12 or more months of consecutive forbearance or 36 or more months of cumulative forbearance, you will receive PSLF credit for those periods of time if you certify qualifying employment.

  • These changes will be applied automatically. 
     

Parent PLUS Borrowers & the IDR Account Adjustment:

If you are a Parent PLUS Borrower who has been in repayment for 25 years or more, you will receive automatic total debt cancellation. Any time in repayment, 12 or more months of consecutive forbearance, or 36 or more months of cumulative forbearance, and any months spent in non-school deferments prior to 2013 count towards time in repayment.

If you have not been in repayment for 25 years, you will receive credits towards IDR cancellation. You will need to consolidate your Parent Plus loans and enter onto the Income-Contingent Plan to eventually receive cancellation. If you work in Public Service and are eligible for PSLF cancellation, these credits will also apply towards PSLF.

How to Check your Loan Type:

Are you unsure if you have direct or FFEL loans? Check here for instructions on verifying your loan information. Hover your cursor over your “loan type” in your FSA dashboard and it will say if you have FFEL loans.

How to Find out How Much Qualifying Time You Have:

The Department of Education promised that at the end of the audit, borrowers will be informed of how much qualifying time they have.

 

If you Experience Any Issues:

Submit a complaint to the U.S. Department of Education’s Office of Federal Student Aid at https://studentaid.gov/feedback-center/

Download our IDR Account Adjustment Handout: