Shifting Terrain in Student Loan Policies
As of 2025, the landscape of federal student loan repayments is undergoing notable changes under the new administration’s direction. Recently, the House education committee, led by Republicans, proposed to swap out existing income-driven repayment plans with a streamlined alternative dubbed the “Repayment Assistance Plan.”
Keep an eye out for upcoming developments, as these could reshape how your student loans are managed and repaid.
Main Points at a Glance
- Multiple income-driven repayment options exist to help borrowers reduce their monthly federal student loan installments according to income and household size.
- The income-contingent repayment (ICR) plan typically calculates payments as 20% of discretionary income.
- Though briefly suspended early in 2025, online enrollment for income-driven repayment plans resumed on March 26, 2025.
Currently, the U.S. Department of Education continues to offer several repayment routes for those unable to meet the traditional 10-year repayment schedule. Among these, income-contingent repayment stands out as the sole income-driven plan available to parent PLUS loan borrowers, tailoring monthly dues to income and family size.
While ICR can ease monthly obligations for many federal loan holders, it isn’t a one-size-fits-all solution. Here, we’ll explore what makes this plan tick and whether it’s the right fit for your financial picture.
Understanding the Income-Contingent Repayment Plan
The income-contingent repayment plan is one among several income-responsive options aimed at cutting down your federal student loan payments. By factoring in your earnings and household composition, it adjusts what you owe monthly to better match your financial capacity.
How Payments Are Determined
Under the ICR, your monthly bill corresponds to whichever is less:
- 20% of your discretionary income
- The payment amount for a fixed 12-year repayment plan, tweaked to your income.
The repayment period stretches over 25 years, after which any unpaid balance is subject to forgiveness.
Eligibility for Income-Contingent Repayment
You might be eligible for ICR if your federal loan portfolio includes:
- Direct Subsidized and Unsubsidized Loans
- Direct Consolidation Loans
- Graduate or Professional Direct PLUS Loans
Additionally, borrowers can qualify by consolidating loans not originally eligible for ICR—such as parent PLUS loans, FFEL Program loans, and Perkins loans—into a Direct Consolidation Loan. Note that other income-driven plans do not accept Direct Consolidation Loans created to repay parent PLUS debts.
Crunching the Numbers: Calculating Your Monthly Payment
Most borrowers’ ICR monthly dues come out to 20% of their discretionary income, which itself is calculated by subtracting a poverty guideline-based figure (adjusted for your state and family size) from your annual adjusted gross income.
Your payment will be re-evaluated each year when you recertify your income and family details. Considering the 25-year term of ICR, fluctuations in your financial circumstances can significantly influence your monthly amounts. However, the payment cap matches what you’d pay under a fixed 12-year repayment plan adjusted for income.
ICR and IBR: Side-by-Side Comparison
| Monthly Payment | Lower of 20% of discretionary income or fixed 12-year payment adjusted for income | 10% or 15% of discretionary income, depending on loan disbursement date |
| Repayment Duration | 25 years | 20 or 25 years depending on loan origination date |
| Income Recertification | Annually | Annually |
| Eligible Loans | Direct Subsidized/Unsubsidized, Graduate PLUS, Direct Consolidation Loans (including those consolidating parent PLUS, FFEL, Perkins) | Direct Subsidized/Unsubsidized, Graduate PLUS, FFEL for students, Direct Consolidation Loans excluding those repaying parent loans |
| Ideal Candidate | Parents with PLUS loans | Student borrowers with FFEL loans |
Key Statistical Insight
According to the U.S. Department of Education, as of 2023, nearly 25% of federal student loan borrowers utilize income-driven repayment plans, with total balances across these plans exceeding $1 trillion nationwide. The ICR plan remains less commonly chosen but plays a crucial role for borrowers with parent PLUS loans.
Is the Income-Contingent Repayment Plan Your Best Bet?
Despite being among the less favored income-driven options—since it requires allocating a heftier chunk of discretionary income monthly—the ICR plan is the exclusive pathway for parents holding PLUS loans to access income-based relief.
Want to nail down which repayment plan offers the most bang for your buck? Your loan servicer can run the numbers, but arming yourself with independent research and personal calculations is smart. The federal government’s online calculators can come in handy for this.
When Does ICR Make Sense?
If speeding up loan payoff isn’t your priority and the standard 10-year plan feels out of reach, ICR might strike the right balance. Plus, if you’re a parent with PLUS loans seeking manageable monthly payments, this plan is your only income-driven avenue.
Frequently Asked Questions
Is Income-Contingent Repayment the Same as Income-Based Repayment?
No — income-based repayment plans can require payments as low as 10% of your discretionary income, whereas ICR demands at least 20%. They also differ in repayment timelines and which loans qualify.
What Happens After 25 Years on an Income-Based Repayment Plan?
Similar to ICR, the maximum repayment window for IBR spans 25 years for loans taken before July 1, 2014, and 20 years thereafter. Any remaining balance at term-end becomes eligible for forgiveness, though it’s important to consider potential tax implications on forgiven amounts.
Can I Lose Eligibility or Be Removed from an Income-Driven Plan?
You won’t be outright removed from IBR or ICR plans. However, missing your annual income recertification triggers a reversion to standard payments—no longer adjusted for your income—until you update your info.
What If My Income Changes and I Previously Didn’t Qualify for ICR?
If your financial situation improves, or your earnings fluctuate, you can apply for income-contingent repayment at any point—even if you weren’t eligible before.