What Is Income Contingent Repayment On Student Loans

The icr plan calculates your monthly loan payment based on income and size of your family.

What is income contingent repayment on student loans. Icr generally limits payments to 20 of your discretionary income. As mentioned above income contingent repayment icr is one of the four income driven repayment plans offered by the government. Though it doesn t always result in the lowest monthly payment for borrowers it is the best choice if you re looking for a way to pay the least amount over the long term when refinancing your student loans. 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.

Monthly amount to be paid by the borrower depends on his or her income. Income based repayment plan ibr. Income contingent repayment is the only income driven plan open to all federal direct loan borrowers including those with parent plus loans or consolidation loans that include parent plus loans. Income contingent repayment is an arrangement for the repayment of a loan where the regular e g.

This type of repayment arrangement is mostly used for student loans where the ability of the new graduate borrower to repay is usually limited by his or her income. Income contingent repayment the income contingent repayment icr plan is designed to make repaying education loans easier for students who intend to pursue jobs with lower salaries such as careers in public service. There are no income hardship requirements which means anyone with a federal loan can qualify for the program. Income contingent repayment icr is the oldest of the income driven repayment plans and it also may be the most expensive.

Student loan income based repayment plans several income driven plans are available if your income is low or unstable or you have moderate income with very high student loan debt. Still if you have a parent plus loan income contingent repayment is. It does this by pegging the monthly payments to the borrower s income family size and total amount borrowed. Looking at your income and family size it s possible for servicers to adjust your repayment amount and schedule so that your monthly student loan payments are more affordable.

Income contingent repayment is one of four income driven options for those with qualifying federal student loans. Here are some of the basic features of icr. The income contingent repayment plan is one of the relief options available to student loan borrowers struggling to keep up with payments. Your payment amount under an income driven repayment plan is generally a percentage of your discretionary income.

Income contingent student loans for pre 2012 plan 1 loans from 1 september 2019 until 31 august 2020 the maximum interest rate that can be set for the existing income contingent repayment loans.