What Is Income Contingent Repayment Plan

What you would pay on a repayment plan with a fixed payment over 12 years adjusted according to your income.

What is income contingent repayment plan. Federal reserve some 20 of consumers who have outstanding student loans are struggling to pay off that debt. This repayment plan originated from the passing of the health care and education reconciliation act of 2010. Income contingent repayment plan icr under the icr plan your payment is the lesser of. 20 of your discretionary income or.

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. The income contingent repayment icr plan aims at reducing your monthly student loan payments by basing payments on your discretionary income. It does this by pegging the monthly payments to the borrower s income family size and total amount borrowed. As part of the act the department of education now offers a variety of student loan repayment.

Borrowers who qualify for the 20 option can make payments under icr for up to 25 years. 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. But those high monthly repayments might actually help cut down on the total cost of your loans. Income contingent repayment icr an icr plan allows you to pay the lesser between either 20 of your discretionary income or what you would pay with a fixed plan over 12 years.

Income contingent repayment icr is the oldest of the income driven repayment plans and it also may be the most expensive. The income contingent repayment icr plan is a repayment plan with monthly payments that are the lesser of what you would pay on a repayment plan with a fixed monthly payment over 12 years adjusted based on your income or 20 of your discretionary income divided by 12. The income contingent repayment plan was created to help student loan borrowers achieve a student loan payment that they can actually afford. Depending on your income and family size you might even qualify for no monthly payments under the icr plan.

If you re having a hard time making your monthly payments and have federal student loans one of the four plans above might help. In this article. Income contingent repayment is an arrangement for the repayment of a loan where the regular e g. Income based repayment ibr income contingent repayment icr according to the u s.

Still if you have a parent plus loan income contingent repayment is.