October 27, 2021

What is Income-Driven Repayment (IDR)?


An Income-Driven Repayment (IDR) plan is a type of student loan repayment plan available in the United States for federal student loans. This program is designed to make the repayment process more manageable and affordable for borrowers who are struggling to make their monthly payments. This can be a daunting task for many graduates who are just starting out in their careers.

Should You Consider IDR?

IDR plans offer flexible repayment options based on the borrower's income and family size. It can be a great option for those who have a lower income or are facing financial hardship.

As 43.6 million borrowers with federal student loans are about to enter repayment after a 3-year payment pause, more are asking if an IDR plan is right for them. Consider an income-driven repayment plan if:

  • You won't be able afford your monthly federal student loan payment over the long term.
  • You took out loans when interest rates were high.
  • You've recently become unemployed or experienced reduced income.
  • You want to pursue Public Service Loan Forgiveness.
  • You're in the early stages of your student loan repayment term.

Are You Eligible for IDR?

To qualify for an Income-Driven Repayment (IDR) plan, borrowers must meet specific criteria. This typically includes being in good standing on their loans, having a certain type of federal loan, and meeting certain income requirements. IDR requirements include:

Type of Loan

Most federal student loans are eligible for IDR plans. This includes Direct Loans (subsidized and unsubsidized), PLUS Loans made to graduate or professional students, and Consolidation Loans that do not include Parent PLUS Loans.


To qualify for an IDR plan, you generally need to demonstrate a partial financial hardship. This is often determined by your income and family size. Borrowers with a high debt-to-income ratio are more likely to meet this requirement.

Plan Selection

Different IDR plans have slightly different eligibility requirements. The most common IDR plans are Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE), which will automatically transition to the SAVE repayment plan in July 2024. Each plan has specific criteria regarding when you took out your loans and your income relative to your loan balance.

Tax Filing Status

Your tax filing status can also impact your eligibility for certain IDR plans. For example, married borrowers might have different requirements depending on whether they file their taxes jointly or separately.

Loan Default Status

Generally, borrowers with defaulted loans are not eligible for IDR plans until they have rehabilitated their loans or consolidated them out of default.

Loan Types

Private student loans are not eligible for federal IDR plans. Only federal student loans are eligible.

What IDR Plan Are there?

1. Income Contingent Repayment (ICR)

The ICR only applies to those who have Direct Loans. It accounts for the adjusted gross income, the payer’s family size, and the Direct Loan balance. You’ll have to pay qualifying payments in 25 years, and the rest will be eligible for forgiveness.

2. Income Based Repayment (IBR)

IBR is applicable for Direct Loans and FFELP. It will take into account your student loan debt, family size, and adjusted gross income. Payers often have to give around 10 to 15% of discretionary income. The IBR lasts for 20 to 25 years, and the rest will become eligible for forgiveness.

3. Pay As You Earn (PAYE)

PAYE is only applicable for those with Direct Loans. You’ll have to pay around 10 percent of discretionary income. You’ll also have to prove that you are experiencing partial financial hardship. The plan goes for 20 years of qualifying payments before forgiveness.

4. Saving on Valuable Education (SAVE)

The SAVE plan will replace REPAYE in July 2024, providing the biggest relief to borrowers. The program is applicable to direct loans, and you will pay 5% of your discretionary income for undergraduate loans, and 10% for graduate loans. Additionally, discretionary income is based on 225% of the poverty line, as opposed to 150% with REPAYE, so your monthly payment will be lower. Finally, if you had an original loan balance of $12,000 or less and have been in repayment for at least ten years, those loans will be forgiven. Read more on SAVE here.

Use Chipper for Lower Payments

Chipper can help you find a student loan repayment plan that actually fits into your budget. You simply fill out your information and link your student loan account for us to generate your options in seconds. We help the average student loan borrower save over $300 a month off their student loan monthly payment. Lowering your monthly payment plan can game changing for your personal finance and can be done in minutes! Sign up for Chipper today to get on track with your student loans.

Use Chipper for The Best Path to Forgiveness

Finding your path to student loan forgiveness is easier than ever before. Chipper helps members find better Income-Driven Repayment (IDR) plans every day. Once enrolled in an eligible repayment plan, we can help you explore your forgiveness options and understand your path towards forgiveness. Sign up with Chipper today and get on track with your student loans.

Use Chipper for Round-Ups

Paying off your student loans doesn’t have to be a long and painful journey. Round-Ups are a way to directly pay off your loans with your everyday spending! By tracking your linked spending account(s), we will calculate the rounded up amount from each transaction in a week (IE spending $4.28 would add $0.72 to the weekly amount). We then initiate a payment towards your student loan for the weekly amount. Get chipping away on your student loans with Chipper today.

Use Chipper for Public Service Loan Forgiveness (PSLF)

The Public Service Loan Forgiveness (PSLF) program was created to provide relief to borrowers aiding the public sector. Unfortunately, 30% of applicants are denied due to incorrect paperwork. We can help! Chipper was created to solve this issue by assisting borrowers in understanding their options as well as allowing forgiveness eligible users enroll into the best forgiveness program available. Sign up for Chipper today to see your student loan forgiveness options and get the forgiveness you deserve.

Use Chipper for Teacher Loan Forgiveness (TLF)

The Teacher Loan Forgiveness (TLF) program was created to enable teachers working in Title 1 schools to receive student loan forgiveness of up to $17,500 (depending on their teaching subject). Chipper has helped teachers from all over the country qualify for TLF program and can help you get the forgiveness you deserve today. Find out if you qualify for forgiveness in minutes with our employer search tool.

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