Comprehensive Guide to Income-Driven Repayment Plans

Understanding Income-Driven Repayment Plans: A Complete Guide for 2025

November 20, 2025

8 min read

Student Debt Shield Team

Income-Based Repayment IBR Plan underlined words.

Income-Driven Repayment (IDR) plans have become a lifeline for millions of federal student loan borrowers struggling with high monthly payments. These plans calculate your monthly payment based on your income and family size, potentially reducing your payment to as low as $0 per month while keeping your loans in good standing.

In 2025, understanding your IDR options is more important than ever. With the introduction of the new SAVE plan and ongoing changes to federal student loan programs, borrowers have more opportunities than ever to find affordable repayment solutions.

What Are Income-Driven Repayment Plans?

Income-Driven Repayment plans are federal student loan repayment options that cap your monthly payment at a percentage of your discretionary income. Unlike standard repayment plans with fixed payments, IDR plans adjust based on your financial situation, making them ideal for borrowers with lower incomes or high debt-to-income ratios.

Key Benefits of IDR Plans:

Monthly payments based on what you can afford
Potential for $0 monthly payments if your income is low enough
Loan forgiveness after 20-25 years of qualifying payments
Protection from default and wage garnishment

The Four Types of IDR Plans

1. SAVE Plan (Saving on a Valuable Education)

The newest and most generous IDR plan, introduced in 2023 to replace REPAYE. The SAVE plan offers the lowest monthly payments of any IDR plan.

Payment Amount: 5% of discretionary income for undergraduate loans, 10% for graduate loans
Forgiveness Timeline: 10-25 years depending on original loan balance
Interest Benefit: Unpaid interest is waived - your balance won't grow
Best For: All borrowers, especially those with undergraduate loans

2. IBR (Income-Based Repayment)

One of the most popular IDR plans, available to most federal student loan borrowers.

Payment Amount: 10% of discretionary income (15% for loans from before 2014)
Forgiveness Timeline: 20-25 years
Interest Benefit: Government may pay unpaid interest on subsidized loans for first 3 years
Best For: Borrowers with older loans or those who don't qualify for SAVE

3. PAYE (Pay As You Earn)

Available to borrowers who took out their first loan after October 1, 2007 and received a disbursement after October 1, 2011.

Payment Amount: 10% of discretionary income, never more than standard 10-year payment
Forgiveness Timeline: 20 years
Interest Benefit: Government may pay unpaid interest on subsidized loans for first 3 years
Best For: New borrowers with moderate to high debt

4. ICR (Income-Contingent Repayment)

The oldest IDR plan, available to all Direct Loan borrowers and the only IDR option for Parent PLUS borrowers (after consolidation).

Payment Amount: Lesser of 20% of discretionary income or fixed payment over 12 years
Forgiveness Timeline: 25 years
Interest Benefit: None - interest capitalizes annually
Best For: Parent PLUS borrowers after consolidation

How to Apply for an IDR Plan

Applying for an Income-Driven Repayment plan requires submitting documentation of your income and family size to your loan servicer. The process involves:

Gather Documents

Tax returns, pay stubs, and family size information

Complete Application

Submit through StudentAid.gov or your loan servicer

Recertify Annually

Update your income each year to maintain the plan

Important Reminders:

You must recertify your income and family size every year
Missing your recertification deadline can result in significantly higher payments
Private student loans are not eligible for IDR plans

Need Help With Your IDR Application?

Navigating the IDR application process can be complex, especially when determining which plan is best for your situation. Our document preparation specialists can help you complete your IDR application accurately and efficiently.