Guide to ICR vs IBR Plans
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What is IBR vs. ICR? How does each loan repayment plan work? What is the difference between income based and income contingent repayment plans? What are the pros and cons of IBR and ICR?
What Is an Income-Based Repayment Plan?
Direct subsidized and unsubsidized loans Direct PLUS loans for graduate and professional students Direct consolidation loans that did not repay any PLUS loans made to parents Subsidized and unsubsidized Federal Stafford Loans FFEL PLUS Loans made to graduate or professional students FFEL Consolidation Loans that did not repay any PLUS loans made to parents Consolidated Federal Perkins loans.
How IBRs Work
Pros and Cons of Income-Based Repayment Plans
Shorter repayment period: Your repayment period may only be 20 years compared to other types of federal income-based repayment plans, which may require you to make payments for 25 years. Less discretionary income: You may only need to pay 10% of your discretionary income under IBR, while other income-driven payment plans may require you to pay more. Payment cap: Under IBR, your payment will never be more than what it would be under the Standard Repayment Plan. Strict eligibility criteria: You must qualify for IBR, which means your loan debt must exceed your annual discretionary income or make up a large part of your annual household income. Parent PLUS loan borrowers don't qualify: Parents who borrow using a Parent PLUS loan do not qualify for IBR.
What Is an Income-Contingent Repayment Plan?
Direct subsidized loans Direct unsubsidized loans Direct PLUS Loans made to graduate or professional students Direct Consolidation Loans.
How ICRs Work
Pros and Cons of Income-Contingent Repayment Plans
For parent borrowers: ICR is the only income-driven repayment plan that parent borrowers can take advantage of. Parents must consolidate parent PLUS loans into a direct consolidation loan to qualify. Can qualify through Public Service Loan Forgiveness: If you work for a nonprofit organization or government agency, you can get your loans forgiven, which means that you don't have to pay them back. Payments you make through ICR count toward the required 120 payments. Higher payments: You usually have to make higher payments under ICR plans because ICR caps payments at 20% of your discretionary income and lasts 25 years. Your payment also may be higher than under the Standard Repayment Plan. No loan forgiveness till after 25 years of payments: Some student loan forgiveness programs allow you to qualify after just 20 years of payments, but with ICR, you don’t qualify for loan forgiveness until after 25 years.
IBR vs ICR Plans, Compared
Who IBR Plans Are Good For
Direct subsidized and unsubsidized loans Direct graduate PLUS loans FFEL consolidation loans Direct consolidation loans
Who ICR Plans Are Good For
Frequently Asked Questions
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