13 FAQs for Income-Driven Repayment Plan

You may have been advised to enroll in the Income-Driven Repayment option if you are experiencing financial difficulties. In times of economic hardship, this repayment plan is often preferred over other options, such as forbearance. Particularly, people were more likely to struggle with repayment during the COVID-19 epidemic. The Income-Driven Repayment Plan was, therefore, more important.

This guide answers 13 commonly asked questions about the Income-Driven Repayment Plan.

What is an Income-Driven Repayment Plan (IDR)?

A repayment option for federal student loans borrowers is an Income-Driven Repayment Plan. This plan is based on your earnings. Your monthly payments will increase if your income is high. If your income is very low, you may be eligible for $0 monthly payments.

This repayment plan is best for borrowers who have financial difficulties, as the income level will determine the amount of the payments. An Income-Driven Repayment Plan can be better than asking for loan forgiveness or deferment if you are unable to afford the payments.

You will also need to repay your debt via Income-Driven Repayment options if you want Public Service Loan Forgiveness.

What is the IDR Plan’s Cost?

An Income-Driven Repayment plan, as the name implies, is based on your earnings. Your family size is also important. These two factors will affect how much you pay. You will spend more if you have a large family. Your monthly loan payments should be lower. If the borrower’s earnings are low and their family is large, they may be eligible for $0 monthly payments.

In other instances, however, your monthly payment will be a percentage of your discretionary income. After deducting taxes, discretionary income is the remaining earning amount. It does not affect essential expenses as long as you pay off debt using your discretionary income. Borrowers will have no difficulty paying off debt under the Income-Driven Repayment plan.

Remember that your payment could be 10% or 15%, depending on your discretionary income. The rate you receive will depend on the type of Income-Driven Plan you choose.

How do I determine the exact amount of my repayment?

Your exact payment amount will depend on your income-driven repayment plan, earnings level, and family size. The Loan Simulator tool can help you get an idea of your repayment. This tool is available on the official Student Aid website of the Education Department.

To allow the Loan Simulator to calculate payments under different repayment plans, you will need to provide your qualifications. You can then compare federal repayment plans to find the one that best suits your needs.

You can also contact your loan servicer. The Education Department acts as an intermediary, and federal loan servicing companies act as such. They collect the payments, manage the billing, and help borrowers with their financial problems. To determine the best plan for you, contact them. There is no cost to you. Do not answer calls from people asking for money (e.g., loan servicers).

Other companies offer a calculator that calculates income-driven repayment plans. Although it does not provide exact results, this option can help you to form your expectations.

What if I pay the same amount every time?

Your repayment amount may change. All borrowers must update their credentials every year. This is known as recertifying income and family size. These elements are used to calculate the loan repayment amount. If any of these elements change, the amount you pay will be different. Your new repayment amount will be lower if your job is lost due to the COVID-19 pandemic.

Even if your qualifications have changed, recertification will be required. The deadline for recertification will be sent to you by your loan servicer. To avoid any negative consequences, please submit the form before the deadline. You could lose eligibility for Income-Driven Repayment plans if you fail to recertify.

You don’t have to wait until the new year to update credentials. You can ask a loan servicer for a recalculation of your monthly loan payment amount if your qualifications have changed significantly during the year. First, you will need to request an Income-Driven Repayment plan (IDR). When you file the request, you will be asked to explain why you have submitted it. It is important to reply that you have made a significant modification to your documentation and that you would like payments to be recalculated.

What happens if I forget to recertify my income?

The responsibility of informing you of the recertification deadline is on your loan servicer. Some borrowers may miss the notification or forget to upload documentation indicating income and family size to have their monthly loan payments recalculated. The consequences of this situation will depend on the plan you are enrolled in.

Pay as you Earn, Income-Based or Income-Contingent Plans.

If you are enrolled under the Income-Contingent Repayment, Pay as You Earn, and Income-Based plans, your eligibility will not be affected. These plans will continue to be available even if you don’t recertify your documents. Your loan payment amount will not be determined by your earnings. Instead, you’ll pay the amount required by the 10-year Standard Plan.


However, if your eligibility is not renewed, the Revised Pay as You Earn Program will be terminated. The alternative plan will be used for your student loan. The new monthly payment amount will be either the rate needed to repay the debt in 10 years or the end date of the REPAYE program. You will have the opportunity to enroll in Income-Driven Repayment plans instead.


If you are enrolled with REPAYE or PAYE plans, any unpaid interest rates will be capitalized on the outstanding balance. Capitalization is when interest is added to the original debt plans. As a result, your debt amounts increase, and you pay more interest. In the end, you’ll pay more than you owe.

What happens if I forget to recertify my family size?

You must recertify the family size each year in addition to your income. The debt payment will be lower if the family is larger. If your family is smaller, the loan payment will be higher.

The loan servicer will assume your family size is one if you don’t recertify your family. Your loan payment amount will therefore be higher if your family size is larger than it would be if you submitted a smaller one. Recertifying your family size is not recommended. If you are enrolled with Income-Based or Payment as You Earn plans, you could lose the right to receive income-based payments.

What is the maximum amount of time I will be in repayment?

There are many types of Income-Driven Repayment plans. The repayment period will vary depending on the plan you choose. You can usually repay your debt within 20 to 25 years. This repayment period may seem longer than the Standard plan. Keep in mind that the monthly payments will be higher if your repayment period is shorter. It is difficult to find a plan with a shorter payback time if you are looking for a more affordable plan.

The great thing about an Income-Driven repayment plan is that the borrower receives full loan forgiveness for any remaining balances after the repayment plan. You will have to repay your debt for 20 years if you sign up for the Pay as You Earn Program. If you have a balance of outstanding debt, the government will forgive it or make it disappear after this period. The remaining amount will be forgiven or eliminated from your account without any additional cost to you.

Is forgiveness subject to income-driven repayment?

Unfortunately, yes. Income-Driven Repayment plans allow for forgiveness of any remaining balance after the repayment period ends. Although forgiveness may sound appealing, it might not be beneficial to you. According to the IRS, the forgiveness of loans through repayment plans is considered income taxable. Therefore, you may be subject to additional income taxes if you are granted forgiveness.

If you receive forgiveness for $10,0000 of outstanding debt, and the tax rate is 10%, you may be required to pay $1000 additional taxes. This amount may seem small in comparison to the amount of forgiven debt. Many people don’t have the cash to pay extra taxes. They can, therefore, again go into debt to pay taxes. This is why you should consider this before you apply for an Income-Driven Repayment Plan.

How do you decide if an income-driven repayment plan is a right choice?

There are many federal student loan repayment programs available. You might be confused as to which one is best. There are many ways to decide which plan is right for you.

You can start by researching. To learn more about the eligibility conditions and payment amounts, visit our Student Aid website. This method is not easy because many borrowers don’t have the financial knowledge to fully understand the terms of repayment plans.

The next step is to contact your loan servicer. The loan servicer will help you choose the right plan and enroll you. Remember that enrollment in a new plan does not cost anything, and you are not required to make any payments.

It is important to mention that loan servicers can sometimes mislead borrowers. Because they are responsible for the operations of millions of student loan debtors and can’t offer personalized services to each borrower, loan servicers cannot provide tailored services. Sometimes, loan servicers can mislead borrowers into incorrect repayment plans or ineffective debt management strategies. Forget Student Loan can help you get advice from third-party experts in debt. Our experts have years of experience working with borrowers and can offer customized services to you. They will also analyze your finances to help you make the best decision.

How to send an Income-Driven Repayment Plan request?

You will need to complete an application form if you wish to enroll in an Income-Driven Repayment Plan. This is the Income-Driven Payment Plan Request. It can be submitted online or on paper. You can access your FSA profile online, which you can access through the Student Aid website. You can also request a paper form from your loan servicer. Fill out the form and attach the documents. Then, mail it to the address. One application is required for each service if you have multiple loan servicers.

The loan servicers will need to take some time to review your documents and calculate the loan amount. It will take approximately a week to process your request. You can request loan forgiveness from the loan servicer if you are experiencing financial difficulties until you enroll in a new plan.

Income-Driven Repayment Plan

What are the Different Types Of Income-Driven Repayment Options

The federal government offers several Income-Driven Repayment options to give borrowers more flexibility. You can choose which one suits you best.

  • Revised Pay as You Earn Plan – This plan requires 10% of your discretionary income. It is extremely affordable. This plan requires undergraduate students to repay their debt in 20 years, and graduate students can do so in 25 years.
  • Pay as You earn – The Pay as You EARN plan requires 10% discretionary income. It takes 20 years for borrowers to be forgiven for any remaining debt. This option will not allow you to pay more than a standard 10-year plan.
  • Income-Based Repayment: The amount of the payment can be 10% to 15%, depending on when your loan was received. After July 2014, new borrowers pay lower interest rates. Their repayment term is also only 20 years. To qualify for forgiveness, others pay 15% of their discretionary income over 25 years.
  • Income-Contingent Repayment: Borrowers who are part of the Income-Contingent Repayment program pay 20% of their discretionary income. Alternately, you can pay the amount to repay the debt within 12 years. Borrowers can also repay their debt within 25 years.

What are the alternatives to income-driven plans?

If you’re facing financial difficulties, the income-driven repayment plan is often the best option. This plan requires that borrowers only pay a small amount each month to cover their debt obligations. This makes it easier to repay debt.

If you are not eligible for this plan, there are other options. You can first apply for loan deferment or for loan forbearance. These benefits will allow you to stop paying the loan for a few weeks. You can now focus on improving your finances. These are not long-term solutions.

You can also check out federal loan repayment options if you don’t have financial problems and want to repay the loan in a way that works for you.

Gradual Repayment Plan

Your initial payments with a Graduated Repayment plan will be lower than the rest of your loan. The payment amount will increase every two years, however. This plan may be suitable if you are just starting a job or believe that your future income will increase. Except for consolidation loans, the time it takes to repay debt is ten years.

Standard Repayment Plan

Borrowers can also use the Standard Repayment plan to help them repay their debt within ten years. The payment amount is not subject to change, unlike the Graduated Repayment plan. This plan will require you to pay $50 per month.

Extended Repayment Plan

Extended Repayment Plan is a combination of the two above options. This plan allows you to either pay a fixed or graduated amount. It usually takes 25 to repay your debt. There are also different eligibility criteria. For example, if you have more than $30,000 in outstanding debt.

How do I change the repayment plan?

It is simple and easy to change your repayment plan. All you need to do is contact your loan servicer and follow their instructions. It is possible that you will be asked to complete an application and provide documentation. You will need to wait for your request to be approved before a new repayment amount can be calculated. Be aware that scammers may ask for fees if you are trying to modify your income-driven repayment plan. You should not follow their instructions as there is no affiliation between loan servicing companies and the Education Department in this area.

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