Choosing the Sweetest IDR Plan for Your Student Loan

by Kevin Ree

If you decide on an Income-Driven Repayment (IDR) plan for your federal student loan payments, you’ll see 4 plans within this plan to choose from. YEP, that sounds messy. Looking at general info like loan eligibility, estimated payments based on your discretionary income (after taxes), loan forgiveness, plan renewal and interest assistance, let’s bite in and get a taste for each. 🍦

1. INCOME-BASED REPAYMENT (IBR):

• ELIGIBLE LOANS: Direct Subsidized and Unsubsidized, Direct Graduate PLUS loans, FFEL Consolidation Loans, Federal Direct Consolidation Loans.
• PAYMENTS and FORGIVENESS: Loans received on or after 07/01/14, payments capped @ 10% of your discretionary income. Loan forgiveness after 20-yrs of qualifying payments. Loans issued before 07/01/14, payments capped @ 15% of discretionary income. Loan forgiveness after 25-yrs of qualifying payments.
• RENEWAL: Required annually (every 12-mos).
• INTEREST ASSISTANCE: YES. After monthly payments applied, the government pays the difference on any remaining accrued interest on the subsidized loans for the first 3-yrs. 

2. PAY AS YOU EARN (PAYE):

• ELIGIBLE LOANS: All Direct Loan types (except Parent PLUS Loans and consolidation loans that repaid Parent PLUS Loans) that were issued on or after 10/01/07 AND have received disbursement on or after 10/01/11.
• PAYMENTS and FORGIVENESS: Generally set @ 10% of discretionary income. Loan forgiveness after 20-yrs of qualifying repayments.
• RENEWAL: Required annually (every 12-mos).
• INTEREST ASSISTANCE: YES. After monthly payments applied, the government pays the difference on any remaining accrued interest on the subsidized loans for the first 3-yrs.

3. REVISED PAY AS YOU EARN (REPAYE):

• ELIGIBLE LOANS: All Direct Loan types (except Parent PLUS Loans and consolidation loans that repaid Parent PLUS Loans). 
• PAYMENTS and FORGIVENESS: Payments capped @ 10% of your discretionary income. Loan forgiveness after 20-25-yrs (depends on undergraduate, graduate or professional study).
• RENEWAL: Required annually (every 12-mos).
• INTEREST ASSISTANCE: For subsidized loans, 100% of unpaid interest (the amount left after your payment) paid by the government for the first 3-yrs, and 50% after 3-yrs. For unsubsidized loans, 50% of unpaid interest paid by the government. 

4. INCOME-CONTINGENT REPAYMENT (ICR):

• ELIGIBLE LOANS: All Direct Loan types except Parent PLUS Loans (unless part of a Direct Consolidation made after 07/01/06).
• PAYMENTS and FORGIVENESS: Monthly payments calculated @ 20% of discretionary income OR payments based on fixed, 12-yr repayment plan (adjusted according to income). Loan forgiveness after 25-yrs of qualifying payments.
• RENEWAL: Required annually (every 12-mos).
• INTEREST ASSISTANCE: NO. You’re responsible for all accrued interest.

Other factors, including your marriage status can have impact on the right plan for you, we encourage you to read on: StudentAid.ed.gov/IDR

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