Credible takeaways
- ICR payments are based on the lesser of 20% of your discretionary income or a fixed 12-year repayment amount adjusted for income.
- Any remaining balance is forgiven after 25 years of qualifying payments.
- Borrowers without any federal loans disbursed on or after July 1, 2026, can remain on or enroll in ICR through June 30, 2028.
- ICR will end on July 1, 2028, so borrowers must switch to another eligible repayment plan before then or be automatically moved to a new plan.
The Income-Contingent Repayment (ICR) Plan can lower federal student loan payments based on your income and offers forgiveness after 25 years. However, new eligibility restrictions took effect on July 1, 2026, and the plan will be eliminated in 2028. Here’s how ICR works, who can still qualify, and what current borrowers should do next.
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What is the Income-Contingent Repayment Plan?
The Income-Contingent Repayment Plan is a federal income-driven repayment plan that calculates your monthly student loan payment on your income, family size, and loan balance. The remaining balance you have after making regular payments for 25 years can be canceled.
ICR is also the only income-driven repayment plan available to parent PLUS borrowers. To qualify, you must have consolidated your parent PLUS loan into a Direct Consolidation Loan before July 1, 2026.
How are ICR payments calculated?
Under ICR, your monthly payment is the lesser of:
- 20% of your discretionary income
- The amount you would pay on a fixed 12-year repayment plan, adjusted based on your income
For ICR, discretionary income is the difference between your adjusted gross income (AGI) and 100% of the federal poverty guideline for your family size and state:
Your AGI － 100% of federal poverty guideline = discretionary income
Your payment is recalculated each year based on your updated income and family size. You must recertify this information annually, even if nothing has changed. As a result, your payment may increase or decrease from year to year. Any balance remaining after 25 years of qualifying payments is forgiven.
Note
Amounts forgiven through an income-driven repayment plan in 2026 or later are generally considered taxable income for federal tax purposes. State tax treatment varies.
How ICR is changing after July 1, 2026
Borrowers with federal loans disbursed on or after July 1, 2026, are no longer eligible for ICR. However, those without any new federal loans disbursed on or after that date can still enroll through June 30, 2028.
“ICR has not changed for borrowers currently enrolled,” says student loan attorney Adam S. Minsky, Esq. “It’s just no longer available for new borrowers.”
ICR will be phased out on July 1, 2028. Before then, borrowers must switch to another eligible plan, such as Income-Based Repayment (IBR), Repayment Assistance Plan (RAP), or the Tiered Standard Repayment Plan. Those who don’t choose a new plan may be automatically enrolled in RAP.
What parent PLUS borrowers should know about ICR
ICR is the only income-driven repayment plan available to parent PLUS borrowers. To qualify, you must have consolidated your parent PLUS loan into a Direct Consolidation Loan before July 1, 2026.
Parent PLUS borrowers who did not consolidate by that deadline can no longer access ICR.
ICR will be phased out on July 1, 2028. Parent PLUS borrowers currently enrolled in the plan must switch to IBR before then. Those who don’t choose a new plan will be automatically enrolled in IBR.
ICR vs. other repayment plans
Is ICR a good repayment option?
ICR may be worth considering if it lowers your monthly payment or gives you access to income-driven repayment. Before the federal repayment changes took effect, it was the only income-driven option available to parent PLUS borrowers who consolidated their loans into a Direct Consolidation Loan.
However, ICR doesn’t always result in the lowest payment. Your monthly cost depends on factors such as your income, family size, and loan balance, so another repayment plan may be more affordable.
The recent changes have also made it harder for borrowers to understand their options.
“Current borrowers are confused about what repayment plans they qualify for, how long these repayment plans will remain available, and what their monthly payments will be,” says Mark Kantrowitz, nationally recognized financial aid expert and author.
Editor insight: “I highly recommend contacting your loan servicer for help comparing the plans available to you and choosing one that supports your financial goals. You can also use Federal Student Aid’s Repayment Calculator to simulate estimated monthly payments and total repayment costs under each plan you’re eligible for.”
— Renee Fleck, Student Loans Editor, Credible
How to enroll in or switch to ICR
Follow these steps to enroll in ICR or switch to another repayment plan:
- Sign in to StudentAid.gov: Log in with your StudentAid.gov account and start an Income-Driven Repayment Plan (IDR) request.
- Provide your financial information: You can authorize the Department of Education to retrieve your federal tax information directly from the IRS. You may need to submit other income documentation if you don’t provide consent or your tax return doesn’t reflect your current income.
- Choose a repayment plan: Select ICR or another plan you’re eligible for.
- Submit your application: Your loan servicer will review your request and notify you when your new repayment plan and payment amount are approved.
- Update your information annually: You must recertify your income and family size each year. Providing consent to access your federal tax information may allow this information to be updated automatically.
FAQ
Is ICR still available after July 1, 2026?
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Does ICR qualify for Public Service Loan Forgiveness?
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Can parent PLUS loans use ICR?
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Is ICR better than IBR?
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What happens when ICR ends in 2028?
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Can I switch from ICR to RAP?
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Does ICR lower your student loan interest rate?
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