Income-driven repayment

What It Means

Income-driven repayment (IDR) is a group of federal student loanFederal student loanA student loan made by the U.S. Department of Education, with a fixed rate set by law and federal repayment plans and protections. See more plans that base your monthly payment on your income, and in some plans your family size, rather than on how much you owe. If a balance is left after 20 to 30 years of qualifying payments, depending on the plan, it can be forgiven, according to studentaid.gov. The newest plan, the Repayment Assistance Plan (RAP), opened on July 1, 2026. Private student loansPrivate student loanA student loan from a bank or other private lender, priced by your credit and governed by its contract rather than federal student loan rules. See more have no IDR plans.

How People Say It

• "My payment went down when I switched to an income-driven plan."
• "I had to move off SAVE."
• "Income-driven cut my payment in half."

The Breakdown

Worked example. A borrower earns $60,000 a year. Suppose the plan's share for that income is 5% (an example; check your own). Five percent of $60,000 is $3,000 a year, or $250 a month, and RAP then subtracts $50 for each dependent:

What the result means. Your balance doesn't enter the math, so two people with the same income and family owe the same payment on a $20,000 or a $90,000 balance. The Department of Education says RAP waives the unpaid interestInterest rateThe yearly percentage a lender charges for borrowing money, not counting fees; the APR adds certain fees to show a fuller cost. See more for the month when you pay on time, and if your payment would cut the principal by less than $50, the government adds a match of up to $50, so the balance keeps coming down.

Which plans exist in 2026. A court order ended the SAVE plan, and studentaid.gov says SAVE borrowers must choose a new plan. Two older plans, Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR), will be retired no later than July 1, 2028. RAP forgives any remaining balance after 360 qualifying payments, which is 30 years.

Good to Know

Studentaid.gov confirms that payments under RAP count toward Public Service Loan ForgivenessLoan forgivenessA program that cancels some or all of a loan's remaining balance once you meet its rules, most often a federal student loan program. See more when you meet that program's other rules. Which plans you can pick depends on when your loans were made and what kind they are, so compare your options with the repayment calculator or your account on studentaid.gov rather than a general rule. Federal Student Aid's servicer pages note that a balance forgiven at the end of an income-driven plan can count as taxable income, so ask a tax professional before your forgiveness date.

Related Terms and Categories

• Federal student loan

  A student loan made by the U.S. Department of Education, with a fixed rate set by law and federal repayment plans and protections.

• Student loan

  Money borrowed to pay for college or career school, repaid with interest after you leave school; it comes from the federal government or a private lender.

• Loan forgiveness

  A program that cancels some or all of a loan's remaining balance once you meet its rules, most often a federal student loan program.

• Forbearance

  A temporary pause or reduction in loan payments that a lender or servicer allows, while interest usually keeps building on the balance.

• Gross income

  The full amount you earn before taxes and other deductions come out. For federal taxes, it's all income you receive unless a law exempts it.

• Debt-to-income ratio

  Your total monthly debt payments divided by your gross monthly income, shown as a percentage; lenders use it to judge whether you can take on a new payment.

Debt and credit