Credible
Get Rates
  • Refinance Student Loans
    • Compare Options
      • Best Refinancing Companies
      • Lender Reviews
      • Refinance Student Loans
      • Student Loan Consolidation
    • Learn the Basics
      • Fixed vs. Variable Rates
      • Forgiveness Programs
      • Consolidation vs Refinancing
      • Repayment Plans
      • More on Student Refi
    • How to
      • Consolidate Your Student Loans
      • Pay Off Your Student Loans
      • Lower Your Interest Rate
    • Tools
      • Current Student Loan Refi Rates
      • Refinancing Calculator
      • Repayment Calculator
      • Student Loan Score Calculator
  • Student Loans
    • Compare Options
      • Private Student Loans
      • Parent Student Loans
      • Law School Loans
      • Medical School Loans
      • Graduate Student Loans
    • Learn the Basics
      • Student Loan Limits
      • Living Expenses
      • Applying for FAFSA
      • Federal Student Loans
      • Student Loan Interest Rates
      • More on Student Loans
    • How To
      • Pay for College
      • Take Out Student Loans
      • Apply Without Cosigner
      • Apply for Student Loans
      • Pay for Grad School
    • Tools
      • Best Private Student Loans
      • Current Student Loan Rates
      • Student Loan Interest Calculator: Estimate Payments
      • Lender Reviews
  • Personal Loans
    • Compare Options
      • Best Personal Loan Lenders
      • Lender Reviews
      • Get Personal Loan Rates
    • Learn the Basics
      • How to Qualify
      • How to Get a Loan
      • Where to Get a Loan
      • Personal Loans with Cosigner
      • Pay Off Credit Card Debt
      • More on Personal Loans
    • Best for
      • Credit Card Consolidation
      • Debt Consolidation Loans
      • Home Improvement Loans
      • Good Credit
      • Fair Credit
      • Bad Credit
    • Tools
      • Current Personal Loan Rates
      • Personal Loan Calculator
  • Mortgages
    • Compare Options
      • Mortgage Refinance
      • Home Loan
      • Best Mortgage Refinance Companies
      • Best Mortgage Lenders
      • Mortgage Preapproval
      • Mortgage Payment Calculator
    • Compare Rates
      • Mortgage Refinance Rates
      • 30-Year Fixed Refinance Rates
      • 15-Year Fixed Refinance Rates
      • Home Loan Rates
      • 15-Year Fixed Mortgage Rates
      • 30-Year Fixed Mortgage Rates
    • Learn the Basics
      • How to Buy a House
      • How to Refinance Your Mortgage
      • How to Get the Best Rate
      • Cash-Out Refinancing
      • More on Home Loans and Refi
    • Pay Off Mortgage
      • Home Equity to Pay Off Debt
      • Paying Off Mortgage Early
      • Mortgage Refinance Cost
  • Insurance
    • Insurance Products
      • Insurance Products
      • Learn more about home insurance
    • Compare Options
      • Compare Insurance Quotes
      • Home Insurance Guide
    • Learn the Basics
      • What Home Insurance Covers
      • How Much Home Insurance You Need
      • Estimate Your Home Replacement Cost
      • How to Change Home Insurance
  • Company
    • About
    • Reviews
    • Blog
    • Lenders
    • Editorial Guidelines
    • FAQs
    • Press
  • Find My Rate
Advertiser Disclosure

Is an Income-Contingent Repayment (ICR) Plan for You?

With an Income-Contingent Repayment plan, you could dramatically shrink your monthly student loan payments, plus qualify for forgiveness down the road.

Kat Tretina Kat Tretina Edited by Ashley Harrison Updated January 26, 2022

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as "Credible."

If you can’t keep up with your student loan payments, you’re not alone. Student loans could eat up a significant amount of your monthly budget — especially if you’re just starting out or have a low income.

One way to more easily manage (and maybe even reduce) your federal student loan payments is to sign up for an Income-Contingent Repayment (ICR) plan.

Here’s how ICR plans work and how to sign up for one:

  • What is Income-Contingent Repayment?
  • Calculate your payment on an ICR plan
  • How to apply for an ICR plan
  • Income-Contingent Repayment and student loan forgiveness
  • Alternatives to an ICR plan

What is Income-Contingent Repayment?

An ICR plan is one of four income-driven repayment (IDR) plans, which are federal repayment options. With ICR, your monthly payment is based on your income and family size.

The following types of federal student loans qualify for ICR:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans for graduate students
  • Direct PLUS Loans for parents (if consolidated with a Direct Consolidation Loan first)
  • Direct Consolidation Loans
  • FFEL PLUS Loans (if consolidated with a Direct Consolidation Loan first)

When you apply and are approved for an ICR plan, your loan servicer will extend your loan term up to 25 years. Your payments will be the lesser of the following:

  • 20% of your discretionary income
  • What you would pay on a 12-year repayment plan with fixed payments, adjusted to your income

If you still have a balance at the end of your ICR repayment term, the U.S. Department of Education will forgive the remaining amount. You’ll no longer be responsible for making payments on the loan. But keep in mind that the forgiven balance is taxable as income, so you could face a hefty tax bill.

Income-Contingent Repayment is usually the most expensive IDR plan, since it requires you to pay 20% of your discretionary income. This is higher than what the other IDR plans charge. Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), and Income-Based Repayment (IBR) charge only 10% to 15% of your discretionary income. Also, the formula for calculating discretionary income in ICR is not as generous as other IDR plans.

However, PAYE and IBR have strict eligibility requirements. ICR, on the other hand, allows any borrower with eligible federal student loans to sign up for it.

Learn More: Income-Driven Repayment Plans

Calculate your payment on an ICR plan

Your discretionary income is the difference between your adjusted gross income (AGI) and 100% of the U.S. Department of Health and Human Services poverty guidelines for your family size and state.

Your AGI – HHS Poverty Guideline = Discretionary Income

(Discretionary Income x 20%) / 12 = Monthly Payment

For example, let’s say you’re single and make $30,000 per year. As of 2019, the poverty guideline for a single person is $12,490. You’d subtract $12,490 from $30,000 to get $17,510 — this is your discretionary income.

Because your ICR payment is 20% of your discretionary income, you’d multiply $17,510 by 20% to get $3,502. Divide that by 12 to get $291.83. This would be your monthly payment under ICR.

Monthly payment based on family size and AGI

AGIFamily size of 1Family size of 2Family size of 3Family size of 4Family size of 5
$10,000$0$0$0$0$0
$20,000$125.16$51.50$0$0$0
$30,000$291.83$218.17$144.50$70.83$0
$40,000$458.50$384.83$311.16$237.50$163.83
$50,000$625.17$551.50$477.83$404.17$330.50
$60,000$791.83$718.17$644.50$570.83$497.17
$70,000$958.50$884.83$811.17$737.50$663.83

How to apply for an ICR plan

To apply for an ICR plan, follow these steps:

  1. Contact your loan servicer: Explain your situation and ask about your options. Your loan servicer can help you decide which IDR plan is right for you.
  2. Complete the application: If you decide that an ICR plan is the best option, you can complete the application online or request a paper form from your loan servicer. You’ll need to complete an ICR application for each federal loan you have.
  3. Provide proof of income: You can submit your previous federal tax returns, or if your income has changed since you filed your return, you can submit pay stubs.
  4. Wait to hear back from the loan servicer: Your loan servicer will review the information you submitted and make a decision. This can take several weeks.

Important: Don’t forget to recertify

When you’re on an ICR plan, you must recertify your income every year. Your loan servicer will send you a reminder when you need to recertify. To do so, you’ll have to submit a new ICR plan application.

You’re only required to recertify once a year. But if you experience a major life change — like a decrease in income — you can submit a recertification application early to possibly lower your monthly payment.

Income-Contingent Repayment and student loan forgiveness

If you plan to pursue Public Service Loan Forgiveness (PSLF), signing up for an ICR plan can help you meet your goal.

Under PSLF, you could qualify for loan forgiveness if you work for an eligible nonprofit organization or government agency for 10 years and make 120 qualifying monthly payments. All payments made under an ICR plan count as qualifying payments, even if you’re eligible for a $0 monthly payment.

At the end of your 10 years, you can apply for PSLF and if accepted, your remaining balance will be discharged. Best of all, the forgiven balance isn’t taxable as income.

Alternatives to an ICR plan

While an ICR plan can help reduce your monthly payments and give you more breathing room in your budget, it isn’t for everyone. You might qualify for lower payments with another IDR plan, so it’s a good idea to compare your payments under each plan before submitting your application.

If you have federal loans that don’t qualify for an ICR plan or have private student loans, another option is loan consolidation. There are two ways to consolidate your student loans:

  • Federal loan consolidation: You can consolidate your federal student loans into a Direct Consolidation Loan. This also makes you eligible for an ICR plan.
  • Student loan refinancing: If you have private student loans (or a mix of both federal and private), refinancing could potentially lower your interest rate or monthly payment. With Credible, you can compare rates from up to 10 refinancing lenders at once without impacting your credit score.
Loading widget - loan-score-tool
About the author
Kat Tretina
Kat Tretina

Kat Tretina is a freelance writer who covers everything from student loans to personal loans to mortgages. Her work has appeared in publications like the Huffington Post, Money Magazine, MarketWatch, Business Insider, and more.

Read More

Home » All » Student Loan Refinancing » Is an Income-Contingent Repayment (ICR) Plan for You?

  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to email a link to a friend (Opens in new window)

Related Articles

Student Loan Refinancing

How to Get Parent Student Loan Forgiveness

Student Loans

Disposable vs. Discretionary Income: Definitions and Calculations

Student Loan Refinancing

Income Driven Repayment: Which Plan Should You Choose?

  • Read More
    • Refi Student Loans
    • In School Loans
    • Personal Loans
    • Mortgages
    • Insurance
  • Resources
    • Lender Reviews
    • Loan Calculators
    • Student Loan Score Calculator
    • Data Insights
    • Debt Statistics
    • Sitemap
  • Compare
    • Student Loan Refinance
      • Current Student Loan Refi Rates
    • Student Loan Consolidation
    • Private Student Loans
      • Current Student Loan Rates
    • Personal Loans
      • Current Personal Loan Rates
    • Refinance Mortgage
      • Mortgage Refinance Rates
        • 15-Year Fixed Refinance Rates
        • 30-Year Fixed Refinance Rates
    • Home Loans
      • Home Loan Rates
        • 15-Year Fixed Mortgage Rates
        • 30-Year Fixed Mortgage Rates
    • Insurance
  • Top Lenders
    • Best Student Loan Refi Companies
    • Best Private Student Loans
    • Best Personal Loans
    • Best Mortgage Lenders
    • Best Mortgage Refinance Companies
  • Company
    • About
    • Reviews
    • Blog
    • Editorial Staff
    • Editorial Guidelines
    • News
    • Press
  • Legal
    • Terms of Use
    • Privacy Policy

© 2023 Credible


Credible Operations, Inc. NMLS ID# 1681276 | NMLS Consumer Access | Licenses and Disclosures
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.