Income-Sensitive Repayment Plan: How It Works and Who Qualifies

Most federal student loans offer repayment plans that base your monthly payments on how much you earn. Federal Family Education Loans (FFEL) are one of these loan types, with the Income-Sensitive Repayment Plan available to certain borrowers.

Here’s what you need to know about the Income-Sensitive Repayment Plan and how to utilize it if you have an FFEL program loan.

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What is the Income-Sensitive Repayment Plan?

The Income-Sensitive Repayment (ISR) Plan is a federal repayment option for student borrowers with FFEL program loans. The plan sets your monthly payment based on your total annual income and loan amount. This is different from other income-driven repayment (IDR) plans, which are based on your discretionary income and family size. FFEL payment amounts are adjusted annually based on income changes.

However, the repayment plan has faced challenges.

“The program was terminated by the Health Care and Education Reconciliation Act of 2010 to make way for federal Direct Loans,” says Bethany Hubert, college lending and financial aid specialist at Going Merry by Earnest. “But millions of borrowers still have outstanding FFEL loans.”

The ISR Plan is still an option for those with outstanding FFEL balances, which is about 7.3 million borrowers as of the third quarter of 2025, according to Federal Student Aid data.

Who qualifies for the Income-Sensitive Repayment Plan?

Eligibility for the ISR Plan depends on a few factors, including who owns your loans, so start by talking to your loan servicer or logging in to StudentAid.gov to determine that. The plan is only an option if your loans are owned and held by the Department of Education.

“The majority of these loans are now federally held,” says Stacey MacPhetres, senior director of education finance at EdAssist by Bright Horizons. “Only a small amount remain held by a commercial lender or guarantee agency.”

If your loan is one of the small number held by a private lender or agency, Income-Sensitive Repayment isn’t a solution. You’ll have to talk to your servicer about any specific repayment plans it might offer.

“Privately held FFEL loans have very few options, as they are private loans,” says Jack Wang, a college aid adviser at Innovative Advisory Group. “For example, during COVID, when federal loans were put into forbearance, privately held FFEL loans borrowers still had to make payments, unless the lender also agreed to pause.”

To qualify for ISR, your loan also must be a subsidized or unsubsidized federal Stafford Loan, an FFEL PLUS Loan, or an FFEL Consolidation Loan — William D. Ford federal Direct Loans aren’t eligible. In addition, you must demonstrate financial hardship and reapply for the plan annually. 

How are payments calculated under ISR?

Under the ISR Plan, your monthly payments are calculated as a percentage of your gross monthly income. The exact formulas vary by lender, but you’ll usually pay between 4% to 25% of your income, according to financial aid expert and author Mark Kantrowitz.

“The payment must be at least the new interest that accrues on the loan,” says Kantrowitz. “Due to this, the loan balance does not increase.”

Payments also must ensure that the loan can be paid off within 10 years. You’ll need to reapply and recertify your income every year, so payments will adjust annually based on any income changes you experience.

How long can borrowers stay on ISR?

The Income-Sensitive Repayment Plan term lasts for a maximum of 10 years, though you must reapply and recertify your income annually to continue qualifying. 

This repayment period is fairly short compared with other income-driven repayment options. For instance, Income-Based Repayment (IBR) offers reduced payments for up to 20 years for borrowers who took out a loan after July 1, 2014, and then any remaining balance is forgiven. However, unlike other income-driven plans, you may see higher monthly payments toward the end of your loan term if you received lower payments earlier in your repayment term.

While there are still borrowers repaying loans via ISR, not many remain. 

“Most borrowers holding FFEL loans have transitioned — via consolidation — to the IBR program,” says MacPhetres. 

Pros and cons of the Income-Sensitive Repayment Plan

The big advantage of the ISR Plan is that it can temporarily reduce your student loan payments if you’re going through a rough patch financially — without having to consolidate or refinance.

Payments can often be minimal (as little as 4% of your monthly income), and they adjust annually, so if your income decreases, your payment may, too.

The downside is that not all FFEL program loans qualify for this plan. Additionally, the plan bases payments on gross income, not discretionary income, which can often mean higher payments than what you’d see on a plan like Income-Based Repayment, which also caps payments.

The Income-Sensitive Repayment Plan can also result in higher payments toward the end of the repayment term, potentially slowing repayment progress. 

“If the payment percentage was low enough, the borrower would make very slow progress toward paying down their debt,” Kantrowitz says. “ISR was intended to be a solution for borrowers with short-term financial difficulty. For borrowers with longer-term financial challenges, IBR is a better option.”

There is also no forgiveness option at the end of the ISR Plan, and the term is shorter than what other income-driven repayment plans offer.