Forgiveness After Income-Driven Repayment Plans

By Daniel SachsUpdated September 20, 2017


What are the various forgiveness after income-driven repayment plans?

You can potentially qualify for debt forgiveness for all four types of income-driven student repayment plans (Revised Pay As You Earn Repayment Plan (REPAYE Plan), Pay As You Earn Repayment Plan (PAYE Plan), Income-Based Repayment Plan (IBR Plan) and Income-Contingent Repayment Plan (ICR Plan)).

Under all four plans your monthly payment is capped at a fixed percentage of your discretionary income with borrowers making payments for a specific number of years. Any remaining loan balance is then forgiven if your federal student loans aren’t fully repaid at the end of the repayment period. You can check out the federal student aid website to see the full details on the payment caps and repayment period associated with each individual plan.

For any of the income-driven repayment plans, periods of economic hardship deferment, periods of repayment under certain other repayment plans, as well as periods when your required payment is zero will all count toward your total repayment period. Whether you’ll have a balance left to be forgiven at the end of your repayment period depends on a number of factors, such as how quickly your income rises and how large your income is relative to your total debt.

Loan qualification

Anyone with federal student loans that qualifies for either the PAYE, REPAYE, IBR and ICR repayment programs is eligible for forgiveness in line with the criteria attached to each individual program.

Requirements

Forgiveness with Pay As You Earn (PAYE)

The PAYE program caps your monthly payment at 10% of your discretionary income. Borrowers make payments for 20 years. Any remaining balance is then eligible for forgiveness.

Forgiveness with Revised Pay As You Earn (REPAYE)

Under REPAYE, your payments will be capped at 10% of your discretionary income. Undergraduate loans are forgiven after 20 years and graduate school loans are forgiven after 25 years.

Forgiveness with Income-Based Repayment (IBR)

With IBR, your student loan payments are capped at 10 to 15% of your discretionary income. After making consistent payments under IBR for 20 or 25 years (terms depend on when you borrowed), any remaining loan balance will be forgiven.

Forgiveness with Income-Contingent Repayment (ICR)

With ICR, you’ll either pay 20% of your discretionary income or what you’d pay on a fixed 12-year plan, whichever is less. Forgiveness occurs after 25 years.

Application process

To apply, you must submit an application called the Income-Driven Repayment Plan Request. You can submit the application online at StudentLoans.gov or on a paper form, which you can get from your loan servicer. When you apply, you’ll be asked to provide income information.

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