Credible takeaways
- The Income-Contingent Repayment Plan adjusts your monthly payments to either 20% of your income or the amount you'd pay on a 12-year fixed plan.
- ICR offers loan forgiveness after 25 years of qualifying payments, though the forgiven balance is currently taxable.
- The ICR Plan is the only federal income-driven repayment plan available to parents with PLUS loans.
- ICR plans are being phased out starting in July 2026 and will be eliminated by July 1, 2028.
The Income-Contingent Repayment (ICR) Plan is one of four federal income-driven repayment options that can make student loan payments more affordable and open the door to loan forgiveness. It's also the only income-driven repayment plan available to parent PLUS loan borrowers through consolidation. As of 2025, more than 1.2 million borrowers are enrolled.
This guide explains how the ICR plan works, who qualifies, and key changes taking effect in 2026 for both new and existing borrowers.
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What is Income-Contingent Repayment (ICR)?
The Income-Contingent Repayment (ICR) Plan is a type of income-driven repayment (IDR) plan that bases your monthly payment on your income and family size.
Under ICR, your monthly payment is the lower of:
- 20% of your discretionary income, or
- what you'd pay on a fixed 12-year repayment schedule, adjusted for income.
Any balance left after 25 years of payments is forgiven. ICR is also the only income-driven plan available to parent PLUS borrowers, but you must first consolidate into a Direct Consolidation Loan to qualify.
This plan will be phased out for new borrowers starting July 2026 and fully eliminated by July 1, 2028. At that point, it'll be replaced by the new federal Repayment Assistance Plan (RAP).
Learn More: How Trump's 'Big Beautiful Bill' Reshapes Federal Student Aid
Who qualifies for ICR?
Income-Contingent Repayment is only available for federal Direct Loans, and only certain loan types qualify:
Note
Parent PLUS loans aren’t directly eligible and must be consolidated in order to qualify for the ICR Plan. While there are no income requirements to qualify, your loans must be in good standing.
How does ICR calculate your monthly payment?
ICR calculates your monthly payments at either 20% of your discretionary income or a fixed 12-year repayment amount, whichever is less. Your discretionary income is the difference between your annual income and 100% of the federal poverty guideline for your state and family size. You must recertify your plan each year by updating your income and family size.
It's important to note that ICR often doesn't lower payments and, in many cases, leads to higher monthly student loan bills.
“Because it uses a high percentage of income and exempts very little, many borrowers end up paying far more than they would under other plans,” explains Chad Cummings, certified public accountant (CPA) and attorney at Cummings & Cummings Law.
“A borrower earning $50,000 could owe about $600 per month under ICR, roughly double the payment under newer plans. Any balance forgiven after 25 years is taxed as income, creating a tax bomb.”
Key changes coming to ICR in 2026
Beginning in July 2026, new federal student loan borrowers will no longer be able to enroll in the ICR Plan. Instead, they'll only have two repayment options: a new version of the Standard Repayment Plan or the Repayment Assistance Plan (RAP), which will replace today's income-driven repayment plans.
If you're already in ICR (or you enroll before July 2026), here are key rules and deadlines you should be aware of:
- You can stay on ICR until it's phased out on July 1, 2028. After that, you'll need to switch to one of the following plans: RAP, Standard, Graduated, Extended, or Income-Based Repayment (IBR).
- If you don't choose a new plan by the deadline, eligible loans will automatically be moved to RAP. Loans not eligible for RAP (such as parent PLUS loans) will be placed into IBR.
What parent PLUS loan borrowers need to know
Current parent PLUS loan borrowers face stricter limits under these changes:
- There's a deadline to consolidate: To retain access to an income-driven repayment plan, parent PLUS loans must be consolidated before July 1, 2026.
- You can enroll in ICR before July 2028: If you consolidate by the deadline and enroll in ICR, you'll later be able to move into IBR once ICR is eliminated. Parent PLUS loans are not eligible for RAP.
- You may risk losing access to income-driven repayment: If you don't consolidate and enroll in time, you'll be locked out of income-driven repayment entirely and be limited to the new Standard Repayment Plan.
- New parent PLUS loans will have limited repayment options: Any parent PLUS loans borrowed or consolidated on or after July 1, 2026, will only qualify for the Standard Repayment Plan.
Editor insight: “If you have a parent PLUS loan and want access to income-driven repayment, I recommend consolidating before the July 2026 deadline and enrolling in the ICR Plan sooner rather than later. This will allow you to switch into IBR once the ICR Plan is fully phased out in 2028. However, if you're comfortable sticking with the Standard Repayment Plan, you don't need to take any action.”
— Renee Fleck, Student Loans Editor, Credible
How to enroll in ICR
If you're eligible and want to enroll before ICR phases out, you can apply on StudentAid.gov. Start by logging in with your FSA ID and selecting the Income-Contingent Repayment Plan. If you have parent PLUS loans, you'll need to consolidate them into a Direct Consolidation Loan first.
As part of the application, you'll provide your income information. You can upload tax documents or use the IRS Data Retrieval Tool for automatic verification. Once submitted, your loan servicer will process your request.
To stay on ICR, you must recertify each year by updating your income and family size.
FAQ
What is happening to Income-Contingent Repayment for student loans?
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What student loans are eligible for ICR?
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How long does ICR take to forgive my student loan?
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Does ICR qualify for Public Service Loan Forgiveness (PSLF)?
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Do I need to recertify my income every year for ICR?
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