Income-Based Repayment (IBR) Plan: How It Works, Who Qualifies

The Income-Based Repayment (IBR) Plan can make federal student loan payments more manageable by tying your monthly bill to your income and family size.

IBR is generally available only to borrowers who haven’t received or consolidated new federal student loans on or after July 1, 2026. If you qualify, the plan may offer lower payments and a shorter path to forgiveness than the Repayment Assistance Plan (RAP).

Here’s how IBR works, who qualifies, and how it compares with your other federal repayment options.

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Overview of IBR

What is the Income-Based Repayment (IBR) Plan?

The Income-Based Repayment (IBR) Plan is a federal income-driven repayment plan that bases your monthly student loan payment on your income and family size.

Your payment amount and repayment term depend on when you first borrowed federal student loans:

• If you first borrowed on or after July 1, 2014: Payments are generally capped at 10% of discretionary income, with forgiveness after 20 years of qualifying payments.
• If you first borrowed before July 1, 2014: Payments are generally capped at 15% of discretionary income, with forgiveness after 25 years of qualifying payments.

You must recertify your income and family size each year, so your monthly payment may increase or decrease as your circumstances change. However, your payment will never exceed what you would pay under the 10-year Standard Repayment Plan.

Who qualifies for IBR?

You may qualify for the Income-Based Repayment (IBR) Plan if you're a student borrower with federal loans disbursed before July 1, 2026, and you haven't received or consolidated a federal loan on or after that date.

IBR eligibility for parent PLUS borrowers

Parent PLUS loans aren’t directly eligible for IBR. However, borrowers who consolidated parent PLUS loans into a Direct Consolidation Loan before July 1, 2026, may qualify by enrolling in the Income-Contingent Repayment (ICR) Plan and making at least one payment under that plan.

Because ICR is scheduled to end on July 1, 2028, eligible parent PLUS borrowers must transition to IBR before then or may be automatically moved into IBR.

How does IBR calculate your monthly payment?

Your monthly payment on IBR is generally equal to 10% or 15% of your discretionary income, depending on when you first borrowed.

For IBR, discretionary income is the difference between your adjusted gross income (AGI) and 150% of the federal poverty guideline for your family size and state. This means your payment may increase or decrease as your income or family size changes.

Certain pretax contributions can reduce your AGI and potentially lower your IBR payment. Mark Kantrowitz, a nationally recognized financial aid expert says, “With income-driven repayment plans, it is also a good idea to try to reduce [your] adjusted gross income by maximizing 401(k) contributions.”

Your tax-filing status may also affect your payment if you’re married. IBR generally uses your combined income if you file a joint federal tax return, while filing separately typically excludes your spouse’s income. However, filing separately can have other tax consequences, so consider consulting a tax professional before changing your filing status solely to lower your student loan payment.

How does IBR forgiveness work?

IBR forgives any remaining eligible loan balance after you complete the required repayment period:

• 20 years if you were a new borrower on or after July 1, 2014
• 25 years if you first borrowed before July 1, 2014

Only qualifying months of repayment count toward forgiveness.

IBR forgiveness may be subject to federal and state income taxes. The temporary federal tax exemption for most student loan forgiveness expired at the end of 2025, so consider preparing for a potential tax bill if you expect to have a balance forgiven.

IBR payments can also count toward Public Service Loan Forgiveness (PSLF) if you meet the program’s employment and other eligibility requirements. PSLF forgives the remaining balance after 120 qualifying payments, and the forgiven amount isn’t subject to federal income tax.

IBR vs. RAP: Which is the better option?

When comparing IBR vs. RAP, IBR may be a better fit if you’re eligible and want payments based on your income without committing to RAP’s 30-year forgiveness timeline.

In some cases, IBR may also offer you a lower payment than RAP. IBR uses 10% or 15% of discretionary income, while RAP bases payments on a percentage of your adjusted gross income.

However, RAP may be a better option if its interest waiver and principal credit could prevent your balance from growing or help you pay down principal faster.

How to apply for the IBR Plan

You can apply for the IBR Plan online through StudentAid.gov or request a paper application from your loan servicer. To apply online:

1. Log in to StudentAid.gov: Start an Income-Driven Repayment Plan (IDR) Request.
2. Choose whether to authorize access to your federal tax information: If you decline, you’ll need to provide alternative proof of income, such as a W-2 or pay stub.
3. Fill out the requested fields: Provide your personal information, loan details, and financial information.
4. Use the repayment calculator: Enter your income and loan information to compare your estimated payment under each eligible plan.
5. Select IBR: If IBR doesn’t appear as an option, you may not be eligible.
6. Review and submit your application: Check that your information is accurate, then certify and submit the request.

Your loan servicer will review the application and let you know whether you qualify and what your new monthly payment will be.