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Updated
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. |
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.
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 There’s minimal information about it on the FSA website — and what’s there might be out of date.
You must have an eligible FFEL Loan to qualify for this repayment plan — that’s the only requirement. Qualifying loans include:
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.
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.
You might want to consider the Income-Sensitive Repayment Plan in the following situations:
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.
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.
Don’t think Income-Sensitive repayments are right for you? You might want to consider these repayment plans instead:
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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