Is Income Driven Repayment Going Away

Everyone · Explainer · Updated October 1, 2026 · LearnLife Editorial

What Is Income-Driven Repayment?

Income-driven repayment (IDR) is a collection of federal student loan repayment plans designed to make monthly payments more affordable by adjusting them according to your income and family size. Instead of a fixed monthly payment, your payment amount is typically calculated as a percentage of your discretionary income, which is the amount you earn above a set poverty guideline.

IDR plans aim to protect borrowers from financial hardship by reducing monthly loan payments when income is low. They also provide loan forgiveness after making payments for a certain number of years, usually between 20 and 25 years. This means if your payments don’t fully repay your loan within that time frame, the remaining balance may be forgiven.

There are several IDR plans, including Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR). Each plan has different rules about how payments are calculated and who is eligible. For example, REPAYE is generally available to all Direct Loan borrowers and sets payments at 10% of discretionary income, while IBR has slightly different formulas and eligibility.

Understanding these options is key to choosing the best plan for your financial situation.

How Does Income-Driven Repayment Work? A Practical Example

Consider a borrower named Jordan who has $30,000 in federal student loans and earns $2,500 per month before taxes. Jordan wants to lower monthly student loan payments by enrolling in an income-driven repayment plan, specifically PAYE, which sets payments at 10% of discretionary income.

Here’s how Jordan’s payment is calculated:

1. Identify the federal poverty guideline for Jordan’s household size. If Jordan lives alone, assume the monthly poverty guideline is $1,100.
2. Calculate 150% of the poverty guideline: 1.5 × $1,100 = $1,650.
3. Subtract this from Jordan’s monthly income to find discretionary income: $2,500 − $1,650 = $850.
4. Calculate 10% of discretionary income: 10% × $850 = $85.

Jordan’s monthly payment under PAYE would be $85, which is significantly less than a standard fixed payment that could be several hundred dollars.

If Jordan’s income changes, for example, increasing to $3,500 per month, the payment recalculates when Jordan submits updated income information:

• Discretionary income: $3,500 − $1,650 = $1,850.
• Payment: 10% × $1,850 = $185.

This flexible system adjusts payments annually based on current income and family size, helping borrowers avoid payment amounts they cannot afford.

Why Should You Care About Income-Driven Repayment?

Income-driven repayment plans matter because they provide a way to keep student loan payments manageable, especially when income is limited or unpredictable. If monthly payments under a standard plan feel overwhelming, switching to an IDR plan can reduce payments substantially.

Lower monthly payments help prevent missed payments and loan default, which can harm your credit and financial future. IDR plans also offer a pathway to loan forgiveness after 20 or 25 years of qualifying payments, providing hope for borrowers who may not be able to fully repay their debt.

For those working in certain public service jobs, making payments under an IDR plan can help qualify for Public Service Loan Forgiveness (PSLF), which can forgive remaining loan balances after 120 qualifying payments.

Because your income can change due to job loss, part-time work, or other life events, IDR plans’ annual adjustment feature ensures payments stay aligned with what you can afford at the time.

Are Income-Driven Repayment Plans Still Available?

Yes, income-driven repayment plans remain fully available for federal student loan borrowers. They continue to be a primary option for managing repayment and are not being discontinued.

To enroll or recertify in an IDR plan, you must submit an application and provide documentation of your income and family size once a year. This process is crucial to keep your payments accurate and affordable.

If you miss the annual recertification deadline, your payment may revert to the standard repayment amount, which can increase your monthly obligation dramatically. Therefore, it’s important to mark your calendar and prepare income documents in advance.

You can apply or recertify online through the official Federal Student Aid website or by contacting your loan servicer directly. If you experience a significant income change during the year, you can also submit an updated application to adjust your payment sooner.

What Is the Difference Between Income-Driven Repayment and Income-Based Repayment?

Income-driven repayment (IDR) is the broad category for repayment plans that calculate your monthly payment based on income. Income-Based Repayment (IBR) is one specific plan within this group.

Here is a summary of common IDR plans:

While many use “income-based repayment” informally to refer to all plans, it technically refers to the IBR plan only. Understanding these distinctions can clarify which plan is right for your loans.

What Steps Should You Take If You Want to Use Income-Driven Repayment?

If you think IDR might help manage your student loans, follow these steps:

1. Review your current loans: Log in to your Federal Student Aid account to see your loan types, balances, and current repayment plan.
2. Estimate your income: Collect recent pay stubs, tax returns, or other proof of income.
3. Use the loan simulator: Visit the Federal Student Aid repayment estimator to compare how different IDR plans affect your payments.
4. Apply or recertify: Submit your application or annual recertification online or by mail, including all required income documentation.
5. Keep records: Maintain copies of all applications, income documents, and confirmation notices.
6. Contact your loan servicer: If you encounter changes in income or family size during the year, notify your servicer promptly to adjust your payment.
7. Set reminders: Mark your calendar for your annual recertification deadline to avoid payment increases.

By taking these steps, you ensure your payments remain affordable and avoid penalties.

What Other Terms Are Often Confused with Income-Driven Repayment?

Borrowers sometimes confuse IDR with other student loan terms:

• Deferment and Forbearance: Temporary pauses or reductions in payments, often used during financial hardship, but interest may continue to accrue.
• Loan Forgiveness: Cancellation of some or all student loan debt after meeting specific requirements, sometimes linked to IDR or public service employment.
• Standard Repayment Plan: Fixed payments over a 10-year term, regardless of income.
• Graduated Repayment Plan: Payments start low and increase every two years, not based on income.

Knowing these differences will help you choose the best repayment strategy for your circumstances.

How Does Income-Driven Repayment Relate to Loan Forgiveness?

IDR plans can lead to loan forgiveness through two main pathways:

• Public Service Loan Forgiveness (PSLF): Forgives the remaining balance after 120 qualifying payments made while working full-time in qualifying public service jobs, with payments made under IDR or other eligible plans.
• IDR Forgiveness: Forgives remaining loan balances after 20 or 25 years of qualifying payments under an IDR plan.

To qualify for forgiveness, it’s critical to make all payments on time, recertify your income annually, and keep detailed records of payments and employment.

Note that forgiveness through IDR after 20-25 years may be considered taxable income, so it’s wise to plan accordingly.

Frequently asked questions

Is income-driven repayment still an option for federal student loans?

Yes, income-driven repayment plans are currently available and remain a key option for federal student loan borrowers looking to manage payments based on income.

Can I switch my repayment plan to an income-driven option anytime?

Yes, you can apply to switch to an IDR plan at any time by submitting an application and income documentation through Federal Student Aid or your loan servicer.

How often do I need to update my income information for an IDR plan?

You need to recertify your income and family size annually to keep your payments accurate and affordable.

Will my student loans be forgiven if I use an income-driven repayment plan?

IDR plans offer forgiveness after 20 or 25 years of qualifying payments. Additionally, borrowers working in public service may qualify for forgiveness sooner through PSLF.

What happens if I miss the annual recertification for an IDR plan?

If you miss recertification, your payment may increase to the standard repayment amount, which is usually higher, so timely recertification is important.