What’s an IDR Payment Plan?

Income-Driven Repayment (IDR) plans are a category of student loan repayment plans available to borrowers once they enter repayment. We previously talked about Fixed Payment plans, which are the other group of plans from which borrowers can choose. They include the Standard, Graduated, and Extended plans, all of which have predetermined payment amounts that the borrower cannot change. On an IDR plan, by contrast, a borrower’s monthly payment can change every year. The amount they are required to pay is calculated as a percentage of their discretionary income, based on their salary and certain other factors. This amount is recalculated every year to ensure that percentage remains accurate. Borrowers can also have their payment recalculated if their income goes down, so it doesn’t become unaffordable and they default.

Two IDR Plans, but only one is right for your student loans

There are two IDR plans available to borrowers with slightly different rules, such as who can qualify for it and how much they would pay each month.

SAVE (Saving on a Valuable Education)

• Available to borrowers with Direct Loans, Direct PLUS Loans, and/or Direct Consolidation Loans
• Not available for Parent PLUS Loans, or for Direct Consolidation Loans that include PLUS or FFEL loans made to parents
• Monthly payment is 10% of discretionary income with no cap

IBR (Income-Based Repayment)

• Available to borrowers with Direct Loans, Stafford Loans, Direct PLUS Loans, FFEL PLUS Loans, and/or Direct Consolidation Loans
• Not available for Parent PLUS Loans, or for Direct Consolidation Loans that include PLUS or FFEL loans made to parents
• Monthly payment is 10–15% of discretionary income, capped at the amount you would pay on the Standard 10-year plan

Although there are two IDR plans, it’s probably pretty obvious that one is almost always going to be preferable. There used to be four plans—which included the PAYE and ICR plans (Enough with acronyms, right?!)—but they are only available now to those who had previously applied for them prior to July 1, 2024, or between July 18 and August 9. Currently, borrowers newly entering repayment can only apply for the SAVE and IBR plans, but we’ll see as to whether that remains true, as the SAVE plan is still being debated in court, and has been paused during the proceedings.

If you applied for the SAVE plan, you have likely been placed in forbearance. No interest is accumulating, and no payments are being taken, but even if you made payments now, they would not count for PSLF due to the forbearance. A coalition of student loan advocates, including Navigate, have urged the Department of Education to change the forbearance so that months in forbearance count for PSLF, and hope that they will resolve this quickly and positively.

If you have questions about payment plans (Do I have the right one? How do I get one? Can I change plans? Should I switch from PAYE, etc., to the new SAVE plan?), give us a call. We’re here to help you get on track by finding the right strategy for your repayment journey, which starts with finding the right plan for you.