Income-Contingent Repayment (ICR)

• Pegs the monthly payments to the borrower's income, family size and total amount borrowed.
• The monthly payment amount is adjusted yearly based on changes in income and family size.
• Caps monthly payments at 20 percent of the difference between adjusted gross income and 100 percent of the federal poverty line.
• Currently available only from the Department of Education, not from private institutions making government-guaranteed loans through the federal Family Education Loan Program.
• The maximum repayment period is 25 years.
• After 25 years, any remaining debt will be forgiven.
  • Note that while extended (25 year) loans may be, overall, slightly more expensive than traditional 10-year loans, relative costs go down as loan term increases
• The interest rate is fixed for the lifetime of the loan
• The new public service loan forgiveness program will discharge the remaining debt after 10 years of full-time employment in public service.
• Only student loans may be included in the income contingent repayment plan. Parent loans are not eligible.
• An ICR calculator can be found here, and more information can be found at: http://www.finaid.org/loans/icr.phtml.

Income-Based Repayment (IBR)

• Similar to income-contingent repayment
• Key differences include:
  • Income-based repayment caps monthly payments at 15 percent of your monthly discretionary income, where discretionary income is the difference between adjusted gross income and 150 percent of the federal poverty line
  • Income-based repayment allows a married borrower who files income tax returns as "married filing separately" to count only the borrower's adjusted gross income and student loan debt. This lets a borrower exclude the (higher) income of his/her spouse when calculating the cap on monthly payments under income-based repayment
• An IBR calculator can be found here, and more information can be found at http://www.finaid.org/loans/ibr.phtml.