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How the federal Income-Sensitive Repayment Plan works
You'll need to have FFEL Loans to take advantage of this plan.
The Income-Sensitive Repayment Plan is an outlier when it comes to income-driven repayment (IDR) plans. It has a shorter term than other IDR plans, is only available for FFEL Loans and doesn’t offer forgiveness once your term is up. But it could be useful for FFEL borrowers who need temporary relief from high repayments.
Income-Sensitive Repayment Plan at a glance
| Eligible loans | How much you pay | Repayment term | Who it’s best for |
|---|---|---|---|
The following FFEL Loans are eligible:
Federal Direct Loans are not eligible for this program. | 4% to 25% of your gross monthly income | Up to 10 years | Borrowers with FFEL Loans who want income-driven repayments for a few years. |
How does the federal Income-Sensitive Repayment Plan work?
The federal Income-Sensitive Repayment Plan comes with repayments based on your gross monthly income, usually between 4% and 25%. At the very least, your repayment must cover the interest that added up over the month.
While most federal loan servicers state this plan comes with a five-year term, the Federal Student Aid (FSA) website says it runs as long as 10 years. After the term is up, you’re automatically enrolled in either a Standard or Graduated Repayment Plan. However, you can choose to switch to another IDR.
Where should I go with questions?
Since the Department of Education (DoE) stopped offering FFEL Loans in 2010, your servicer or lender might be a better source for information about how the Income-Sensitive Repayment Plan works. There’s minimal information about it on the FSA website — and what’s there might be out of date.
Am I eligible for the Income-Sensitive Repayment Plan?
You must have an eligible FFEL Loan to qualify for this repayment plan — that’s the only requirement. Qualifying loans include:
- Subsidized Federal Stafford Loans
- Unsubsidized Federal Stafford Loans
- FFEL PLUS Loans
- FFEL Consolidation Loans
Can I qualify for forgiveness on the Income-Sensitive Repayment Plan?
Possibly — it depends on the program. The Income-Sensitive Repayment Plan is the only IDR plan that doesn’t qualify for Public Service Loan Forgiveness (PSLF) — this program is only open to federal Direct Loans.
However, you might be able to qualify for Teacher Loan Forgiveness if you have a Subsidized or Unsubsidized FFEL Loan. And you could be eligible for other repayment assistance programs through government agencies and private organizations.
Just remember that the IRS considers loan forgiveness as taxable income, so you might not save you as much as you think.
Pros and cons of the federal Income-Sensitive Repayment Plan
The Income-Sensitive Repayment Plan is only right for some borrowers. Weigh the benefits and drawbacks if you’re not sure if you should sign up.
Pros
- All FFEL Loans are eligible. Most FFEL Loans aren’t eligible for IDR plans unless they’re consolidated.
- Get out of debt faster. This program might be ideal for someone who wants a few years of reduced repayments as an alternative to deferment or forbearance.
- Easy-to-calculate repayments. You won’t have to do any complicated math to figure out how much you owe each month, unlike other IDR plans that are based on your discretionary income.
Cons
- FFEL Loans only. Your federal Direct Loans won’t qualify for this plan.
- No IDR forgiveness. Rather than forgiving your debt at the end of the program, your loans automatically get placed in a Standard or Graduated Repayment Plan.
- Potentially high repayments. You could end up paying as much as a quarter of your income before taxes on your loans — which might not be the most affordable option out there.
Is the Income-Sensitive Repayment Plan right for me?
You might want to consider the Income-Sensitive Repayment Plan in the following situations:
- You have unconsolidated FFEL Loans. This is one of the only IDR plans that FFEL Subsidized, Unsubsidized and PLUS Loans can qualify for.
- You expect your income to increase. If you’re starting a lucrative career that requires a few years of low-paying work, this plan could be a good choice.
- You’re making a career change. Starting a new career can sometimes involve taking a pay cut. If you need a few years to change course, this plan can help you stay on top of your loans.
How to apply for the Income-Sensitive Repayment Plan
You can apply for the Income-Sensitive Repayment Plan through your servicer or lender — depending on who owns your loan. Reach out to customer service for more details on how to sign up — typically you can do so by filling out an online application and providing information about your taxes for the previous year.
Do I need to reapply each year?
Yes. The Income-Sensitive Repayment Plan is only available in 12-month increments. You need to submit a new application each year in order to qualify for additional Income-Sensitive repayments.
3 alternatives to the Income-Sensitive Repayment Plan
Don’t think Income-Sensitive repayments are right for you? You might want to consider these repayment plans instead:
- Income-Based Repayment (IBR) Plan. This is the only other IDR plan that works with unconsolidated FFEL Loans. Under the IBR Plan, you pay 10% or 15% of your discretionary income over 20 or 25 years, depending on when your loan was issued. You can learn more with our comparison of the IBR and ISR Plans.
- Graduated Repayment Plan. You can get out of debt in 10 years with this plan while making repayments that start low and increase over time.
- Extended Repayment Plan. Reduce how much you pay each month by signing up for this repayment plan with a 25-year term.
Interested in refinancing instead? Compare your options
Bottom line
The Income-Sensitive Repayment Plan isn’t your typical IDR plan. It’s only available for FFEL loans, it only lasts five or 10 years and your loans won’t be forgiven when it’s over. But it could be a good choice if you’re a new professional looking to reduce your repayments for a few years while you get your career on track.
Read our guide to student loan repayment plans to see how it stacks up to other options.
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