Income-Contingent Repayment Plan: ICR Guide 2024

The Income-Contingent Repayment (ICR) Plan offers income-driven relief for federal student loans. It’s the only income-driven option available to parent PLUS borrowers. You’ll pay 20% of your discretionary income over 25 years. Your remaining balance gets forgiven after that period.

ICR typically results in lower monthly payments than standard plans. However, you’ll pay more interest over time. Understanding how ICR compares to other repayment options helps you make the right choice.

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Key Features of Income-Contingent Repayment Plans

The ICR Plan adjusts your monthly payment based on your income and family size. The U.S. Department of Education sets the terms for this program.

Here’s what you need to know:

25-year repayment period
No minimum income requirement
Fixed interest rate for your loan’s life
Monthly payment equals the lesser of two calculations
Annual income and family size recertification required

Your monthly payment will be either 20% of your discretionary income divided by 12, or what you’d pay on a 12-year fixed plan adjusted for income. You pay whichever amount is lower.

You can change your repayment plan anytime. Recertifying annually ensures your payment stays aligned with your financial situation.

Eligible Loan Types for ICR

ICR accepts nearly all federal student loan types. Parent PLUS borrowers must consolidate into a Direct Consolidation Loan first. ICR is the only income-driven option for these borrowers.

Other eligible loans include:

Federal Direct Loans (subsidized and unsubsidized)
Direct Consolidation Loans
Direct PLUS Loans for graduate students
Direct PLUS Loans for parents

Federal Stafford loans, FFEL loans, and Federal Perkins Loans qualify after consolidation into a Direct Consolidation Loan.

ICR Repayment Timeline and Benefits

The 25-year repayment period creates both advantages and drawbacks. You’ll make 300 monthly payments before qualifying for forgiveness.

Parent PLUS borrowers gain access to income-driven repayment through ICR. No other income-driven plan accepts these loans. You’ll get lower monthly payments than the 10-year Standard Repayment Plan offers.

Any remaining balance gets forgiven after 25 years. All income-driven plans offer this benefit.

Your monthly payment will be 20% of your discretionary income. Other income-driven plans require only 10-15% of discretionary income. The SAVE plan requires just 5-10%.

The extended timeline means you’ll pay more total interest. Your payments stay lower each month, but the cost compounds over 25 years.

Comparing ICR to Other Income-Driven Plans

The Department of Education offers four income-driven repayment options. Each plan shares common features but differs in key ways.

All income-driven plans share these features:

Payments based on discretionary income percentage (5%, 10%, 15%, or 20%)
Family size affects your payment amount
Loan forgiveness after the repayment period (10, 20, or 25 years)
Annual income and family size recertification required

ICR stands apart in important ways. You’ll pay 20% of discretionary income monthly. Other plans require only 10% or 15%.

ICR has the longest repayment period at 25 years. The extended timeline lowers monthly payments but increases total interest paid.

Need help reducing your student loan payments? Our partner Cambridge Credit Counseling can help you explore all your debt management options.

Understanding Discretionary Income Calculations

Your monthly payment under any income-driven plan uses your discretionary income. The calculation method varies by plan.

ICR calculates discretionary income as your annual income minus 100% of the poverty guideline. Your family size and state determine the poverty guideline amount.

IBR and PAYE use 150% of the poverty guideline. The SAVE plan uses 225% of the poverty line. Higher percentages mean more income protection.

How Spousal Income Affects ICR Payments

Married borrowers face different rules under ICR. Your payment includes your spouse’s income and student loan debt. Filing taxes separately doesn’t change this requirement.

ICR typically results in higher payments for married couples. IBR and PAYE exclude spousal income if you file taxes separately.

Annual Payment Adjustments Under ICR

Your monthly payment can change yearly based on income or family size changes. Annual recertification is mandatory for all borrowers.

You must provide updated information to your loan servicer annually. Submit new information even if nothing changed. Your servicer recalculates your payment based on current data.

Income increases typically raise your payment amount. Family size increases can lower your payment. You can request early recalculation if your situation changes significantly.

Income-driven plans adjust payments proportionally to your earning power. Higher income means higher payments under this system.

Applying for Income-Contingent Repayment

Apply for ICR online through the Federal Student Aid website. You can also request a paper form from your loan servicer.

Contact your loan servicer if you’re unsure which plan fits best. Ask which income-driven plans you qualify for. Request information about which plan offers the lowest monthly payment.

Finding Your Federal Loan Information

You can access your loan details through the NSLDS database. Log in using your StudentAid.gov credentials. The system generates a complete report of your loans.

The report shows your loan types, servicers, and balances. You can also call the Federal Student Aid Information Center at 1-800-433-3243.

Submit separate requests to each servicer if multiple companies manage your loans.

ICR and Student Loan Forgiveness Programs

Public Service Loan Forgiveness (PSLF) requires enrollment in an income-driven plan. ICR qualifies for PSLF. You’ll make 120 monthly payments over 10 years.

Your remaining balance gets forgiven after completing the PSLF requirements. Paying extra each month rarely benefits PSLF participants. Minimum payments maximize your forgiveness amount.

You must work for a qualifying employer to use PSLF. Double-check your eligibility before committing to this strategy.

Other forgiveness programs exist beyond PSLF. The Teacher Loan Forgiveness Program forgives up to $17,500 for qualifying educators. You must teach full-time for five consecutive years in low-income schools.

Teacher Loan Forgiveness doesn’t require a specific repayment plan. Some borrowers qualify for both programs.

Alternative Solutions for Overwhelming Student Debt

ICR works well for some borrowers but not everyone. Waiting 20-25 years for forgiveness feels overwhelming to many people. You have other options if income-driven plans feel unmanageable.

These alternatives only apply to federal student loans. Private student loan options are more limited. Refinancing may be your best choice for private loans.

Temporary Relief Through Forbearance or Deferment

Forbearance and deferment pause your federal loan payments temporarily. You can request up to one year of payment suspension. Reapply annually if you need extended relief.

Use these options when facing temporary financial hardship. They provide breathing room without long-term commitment.

Bankruptcy Can Discharge Student Loans

The Department of Education and Department of Justice released new guidance in late 2022. The guidelines clarify student loan discharge eligibility in bankruptcy.

Chapter 7 filers now have a clear process and application for student loan discharge. The new system makes discharge more accessible than before.

Bankruptcy isn’t right for everyone. However, it can provide life-changing relief for borrowers with unmanageable debt. Bankruptcy is a legal tool designed to help people drowning in debt.

Consider speaking with a bankruptcy attorney about your options. They can evaluate whether bankruptcy makes sense for your situation.

Frequently Asked Questions

What is an Income-Contingent Repayment Plan?

An Income-Contingent Repayment Plan is a federal student loan repayment option that bases your monthly payment on 20% of your discretionary income. You'll make payments for 25 years, and any remaining balance gets forgiven. It's the only income-driven plan available to parent PLUS borrowers after consolidation.

How do I qualify for an ICR plan?

You need eligible federal loans including Direct Loans, Direct Consolidation Loans, or Direct PLUS Loans. Parent PLUS loans must first be consolidated into a Direct Consolidation Loan. There's no minimum income requirement. You must recertify your income and family size annually.

Can I switch from ICR to another repayment plan?

Yes, you can change your repayment plan anytime. Contact your loan servicer to discuss other income-driven options like IBR, PAYE, or SAVE. These alternative plans may offer lower monthly payments at 10-15% of discretionary income instead of ICR's 20%.

Does my spouse's income affect my ICR payment?

Yes, ICR includes your spouse's income and student loan debt in the payment calculation regardless of how you file taxes. This differs from IBR and PAYE plans, which exclude spousal income if you file separately. Married borrowers typically pay more under ICR.

How does ICR work with Public Service Loan Forgiveness?

ICR qualifies for PSLF if you work for a qualifying employer. You'll make 120 monthly payments over 10 years, then receive forgiveness on your remaining balance. Paying only the minimum required amount maximizes your forgiveness benefit under PSLF.

Income-Contingent Repayment Plan: Is ICR Right for You?