Income Driven Repayment Plan Interest

An income driven repayment plan won t change your student loan interest rate.

Income driven repayment plan interest. While an income driven repayment plan saves money in the short term it can be more expensive in the long run. The only exception is if you choose to consolidate your loans before enrolling in income driven repayment. If you enroll in an income driven plan and cut your monthly payments you may pay more interest over a longer period of time than you would with a standard 10 year repayment plan. Depending on which you choose you ll pay anywhere between 10 to 20 of your monthly discretionary income based on annual updates.

Switching to an idr plan can lower the amount you re required to pay each month but it won t impact your interest rate. But paying more overall may be worth it to you if it means lowering your monthly payment now so you can make payments on time. Interest will be assessed and charged in the same way it was before you enrolled in the plan. An income driven repayment idr plan is a type of federal plan to pay off your student loans that s based on your income.