How Does Income Contingent Repayment Work

How does the federal income contingent repayment plan work.

How does income contingent repayment work. What types of loans are eligible for income contingent repayment plan. Icr generally limits payments to 20 of your discretionary income. Monthly amount to be paid by the borrower depends on his or her income. The icr plan comes with monthly repayments that are either 20 of your discretionary income or what you d pay on a fixed 12 year plan whichever is less.

Still if you have a parent plus loan income contingent repayment is. How income contingent repayment works the repayment period for icr is 25 years. Income contingent repayment plan icr is quite similar to the income based repayment plan. The monthly repayment amount is determined based on the principal amount borrowed and income and family size of the individual.

Income contingent repayment icr is the oldest of the income driven repayment plans and it also may be the most expensive. Your gross income will be compared to the federal poverty line fpl for your state. The income contingent repayment plan is an income driven repayment option for federal student loans. The only difference is that in order to be eligible for income contingent loan repayment the borrower is not required to be facing a partial financial hardship.

However your payments may instead be capped by the amount of a fixed payment on your loans over a 12 year term if this monthly payment amount is less than 20 of discretionary income. The department of education doe forgives any remaining balance after 25 years. In income contingent repayment plan the principal amount borrowed by an individual is repaid over a period of 25 years in monthly installments. How to qualify for income contingent repayment just like other hardship based programs such as an ibr and pay as you earn you must prove at least partial financial hardship to qualify for icr.

After that your remaining loan balance is forgiven if there s anything left.