For federal student loan borrowers, signing up for an income-driven repayment (IDR) plan can be a way to make your payments more manageable. And, as an added perk, you can even use an IDR plan to qualify for loan forgiveness. If you still have a loan balance at the end of your IDR plan term, the government forgives the remainder.
However, President Trump’s One Big Beautiful Bill (OBBB) made substantial changes to IDR plans and loan forgiveness, so here’s what current and future borrowers need to know.
IDR plans are popular. According to the Office of Federal Student Aid, about 29% of federal loan borrowers are enrolled in IDR plans. There are currently three active plans:
IDR plans base your monthly payments on a percentage of your discretionary income and offer extended repayment terms of either 20 or 25 years. Depending on your income and family size, you could qualify for a payment as low as $0. That means you could pay nothing each month, but still stay current on your loans and even qualify for loan forgiveness down the line.
For example, say you had $20,000 in Grad PLUS Loans — loans for graduate or professional students — with the current 8.9% rate. Under a standard 10-year repayment plan, your monthly payment would be $226 per month.
If you earned $35,000 per year from your job, you could qualify for an IDR plan. If you signed up for PAYE, your monthly payment would be just $96, and you’d make payments for 20 years. At the end of the loan term in August 2045, your remaining loan balance would be forgiven.
Read more: Do I qualify for student loan forgiveness? What’s changed under Trump.
There are currently three IDR plans. However, it’s important to note that significant changes are coming to these plans beginning in July 2026. See what to expect when the Trump admin’s OBBB student loan strategy takes effect.
As of 2025, here are the details for existing IDR plans:
Under IBR, new borrowers — those who took out loans on or after July 1, 2014 — will pay 10% of their discretionary income and are in repayment for 20 years. To qualify, your monthly payment must be less than what you would pay under a 10-year standard repayment plan.
Borrowers who took out loans before July 1, 2024, pay 15% of their discretionary income and can be in repayment for as long as 25 years.
ICR repayment requires the highest percentage of your discretionary income to go toward your payments; under ICR, you pay 20% of your discretionary income. All borrowers enrolled in this plan are in repayment for 25 years.
ICR is notable as the only IDR plan available to borrowers with federal parent student loans, including Direct PLUS or FFEL parent loans. To enroll, parent borrowers must consolidate their loans with a Direct Consolidation Loan; afterward, they can sign up for ICR.
Under PAYE, borrowers pay 10% of their discretionary income, but your payments will never exceed what you would’ve paid under a 10-year standard repayment plan. PAYE defines discretionary income as the difference between your income and 150% of the federal poverty guideline, and borrowers are in repayment for 20 years.
The Saving on a Valuable Education (SAVE) plan was launched in 2023 to replace the Revised Pay As You Earn (REPAYE) plan. It almost immediately encountered legal challenges, and borrowers enrolled in the plan were placed in interest-free forbearance. The SAVE plan is now essentially defunct, and the Department of Education recommends borrowers switch to another repayment plan.
Borrowers who remain in SAVE are still eligible for a payment forbearance, but their loans began accruing interest again on August 1, 2025 — making this a costly option. Borrowers who take no action to change their repayment plan will be automatically switched to a new plan, although the timeline for this change is unclear.
The U.S. Department of Education previously paused forgiveness for borrowers enrolled in PAYE and ICR plans — however, it has since resumed processing forgiveness applications. Eligible borrowers can now receive IDR forgiveness under the IBR, PAYE, and ICR plans.
Once you’ve reached the necessary amount of time in repayment, your loan servicer will automatically discharge your remaining student loans, and it will send you a notification detailing how much of your balance was forgiven.
To enroll in an IDR plan, follow these steps:
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Visit StudentAid.gov: You can complete the entire application process online. You’ll need to have your employment information, family size, and proof of income.
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Use the loan simulator: The federal loan simulator can show you how much your payments will be under each of the available repayment plans.
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Fill out the application: You can select a specific repayment plan or request that your loan servicer place you in the plan with the lowest possible monthly payment. Once the loan servicer reviews your application and approves the plan, you’ll receive a notification with the new payment amount.
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Recertify your income every year: Each year, you must update your income and family information, which can affect your payment amount. You can recertify your income online.
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Make your payments on time: To stay on track toward loan forgiveness, make all of your required payments on time. If you miss payments, those months will not count toward the time necessary for loan forgiveness.
Related: Will I be taxed on student loan forgiveness?
If you’re a parent who took out Parent PLUS Loans to pay for a child’s education, you can take advantage of IDR plans, too. However, parent borrowers have to complete an additional step:
You must consolidate your loans with a federal Direct Consolidation Loan first. Once the loan is consolidated, then you can apply for ICR.
President Trump’s One Big Beautiful Bill made substantial changes to federal student loans and your repayment options, and those changes will affect IDR plans and loan forgiveness in the following ways:
The OBBB eliminated the existing IDR plans. Beginning in 2026, there will be only one plan for new borrowers: the new Repayment Assistance Plan (RAP). Under this plan, borrowers will likely have higher payments than they would under a current IDR plan. Loan forgiveness is still available, but you’ll have to make 30 years of payments to qualify.
Any borrower who takes out new loans on or after July 1, 2026, will only have access to standard repayment or the RAP.
Currently, borrowers can still apply for ICR, PAYE, or IBR plans. However, ICR and PAYE will be phased out, and borrowers will have to transition to IBR, the new RAP, or standard repayment by July 1, 2028.
Parents who take out new loans after July 1, 2026, won’t be eligible for ICR or loan forgiveness through an IDR plan. Current parent borrowers can still qualify for loan forgiveness, but only if they take some time-sensitive steps:
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Avoid new loans: If possible, avoid taking out new federal loans. If you take out a new parent loan, all of your loans will lose eligibility for loan forgiveness.
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Consolidate your loans: All loans must be consolidated with a Direct Consolidation Loan before July 1, 2026. It can take several weeks for your application to be processed, so apply well in advance of the deadline.
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Enroll in ICR: You must enroll in ICR — meaning you applied for the plan and were approved — before July 1, 2026.
Stuck with private student loans with high interest rates? Refinancing your private student loans could mean lower monthly payments and paying less interest overall.
This article was edited by Alicia Hahn.
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