If you have a low income but do not qualify for the Income-Based Repayment Plan (IBR), you may be eligible for the Income-Contingent Repayment (ICR) Plan.

This plan is based on your adjusted gross income, family size, and the total amount of your Direct Loans.

Income-Contingent Plan

If you need to make lower Direct Loan payments, but you do not qualify for IBR, the ICR Plan may be for you.

Eligible Federal Loans

The following loans are eligible for the ICR Plan:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans made to graduate or professional students
  • Direct Consolidation Loans (except Direct PLUS Consolidation Loans)

Loans That Are Not Eligible

  • Federal Family Education Loan (FFEL) Program loans
  • Direct PLUS Loans made to parents, unless consolidated into a Direct Consolidation Loan on or after July 1, 2006

Monthly Payments              

Under this plan, your monthly payments are

  • made for a maximum of 25 years;
  • based on your adjusted gross income, your family size, and the total amount of your Direct Loans; and
  • the lesser of
    • the amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that changes with your annual income or
    • 20 percent of your monthly discretionary income. 

Ten Percent Capitalization Benefit

If your calculated payment amount is less than the amount of interest that accrues on your loan, the interest is capitalized (added to your principal balance) once each year until your balance is 10 percent higher than your original loan balance was when you entered repayment. Once this happens, interest continues to accrue but is not capitalized.

Note: Any interest that accrues during a deferment or forbearance does not apply to the 10 percent capitalization rule. 

Any loan amount that remains after 25 years of payments will be discharged (forgiven). You may have to pay taxes on the amount that is discharged.

Calculate your estimated loan payments under this plan!