IDR Plans: Remaining Options, Payments, and PSLF

Income-driven repayment plans set your federal student loan payment based on your income and household size rather than your balance, and forgive whatever remains after 20 or 25 years of qualifying payments. If your earnings are low compared with your debt, your monthly bill can drop to $0 and still count toward forgiveness.¹ Three plans are open to new enrollees right now: Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR). A fourth, SAVE, has been blocked by a federal court.

What Happened to SAVE

On March 10, 2026, a federal court ordered the Department of Education not to implement the Saving on a Valuable Education (SAVE) Plan. The order also blocked the SAVE interest subsidy, SAVE’s forgiveness timeline, and a provision that would have let defaulted borrowers enroll directly in IBR.²

If you were enrolled in or had applied for SAVE, your loans went into administrative forbearance while the litigation moved forward, and interest kept accruing during that time. You now need to pick a different repayment plan. If you don’t, your servicer will move you into the Standard Repayment Plan or a tiered version of it, both of which usually carry higher fixed payments than SAVE and offer no forgiveness track.² Doing nothing is the costly choice here. Log into StudentAid.gov or call your servicer and choose IBR, PAYE, or ICR before that default happens.

The Three Plans Still Available

Income-Based Repayment

IBR is the most broadly available IDR plan. Your terms depend on when you first borrowed:

Borrowed on or after July 1, 2014: payments capped at 10% of discretionary income, forgiveness after 20 years.
Borrowed before July 1, 2014: payments capped at 15% of discretionary income, forgiveness after 25 years.

Either version caps your monthly bill at what you’d pay on the 10-year Standard Plan. That ceiling is also a gate: if your income-based payment isn’t lower than the standard amount, you can’t get on IBR.¹

Pay As You Earn

PAYE caps payments at 10% of discretionary income and forgives the balance after 20 years, whether your loans funded undergraduate or graduate school.³ As with IBR, your payment can’t exceed the 10-year Standard amount.

Eligibility is narrow. You must have had no outstanding federal student loan balance as of October 1, 2007, and you must have received a Direct Loan disbursement on or after October 1, 2011. Older loans that were still outstanding when you took out newer ones will close PAYE off to you.¹

Income-Contingent Repayment

ICR sets your payment at the lesser of 20% of discretionary income or the amount you’d pay on a fixed 12-year schedule adjusted for your income. Forgiveness comes after 25 years.⁴

ICR produces higher payments than IBR or PAYE for most borrowers because it protects less income (100% of the poverty guideline versus 150%) and takes a larger share of what remains. It matters anyway because it’s the only IDR plan open to Parent PLUS borrowers after they consolidate.¹

How Your Payment Is Calculated

Every IDR plan starts from two numbers: your adjusted gross income (AGI) from your most recent federal tax return and the federal poverty guideline for your household size. Your AGI is on line 11 of Form 1040.⁵ The plans then subtract a multiple of the poverty guideline to get your “discretionary income”:

IBR and PAYE: AGI minus 150% of the poverty guideline.
ICR: AGI minus 100% of the poverty guideline.

For 2026, the federal poverty guideline for a single person in the 48 contiguous states is $15,960.⁶ Under IBR or PAYE, 150% of that is $23,940. A single borrower earning $45,000 has discretionary income of $21,060, and at 10% the monthly payment is about $175. Under ICR the same borrower subtracts only $15,960, leaving $29,040 in discretionary income; at 20%, that’s roughly $484 per month. The spread is why picking the right plan matters.

If your calculated payment lands at $0, that month still counts as a qualifying payment toward forgiveness as long as you stay enrolled.¹

Which Loans Qualify

IDR plans are open to borrowers with federal Direct Loans, including Direct Subsidized, Direct Unsubsidized, and Direct Consolidation Loans. Older Federal Family Education Loan (FFEL) Program debt must be rolled into a Direct Consolidation Loan first. Perkins Loans need the same treatment.¹ Consolidation resets the forgiveness clock, so weigh that carefully if your existing loans already have qualifying payments behind them.

Private student loans don’t qualify for any federal IDR plan. Loans in default also don’t qualify; you’ll need to resolve the default through rehabilitation, consolidation, or full repayment before you can enroll. The March 2026 court order removed a workaround that would have let defaulted borrowers enroll directly in IBR.²

How Marriage and Tax Filing Change the Math

If you’re married and file a joint tax return, your IDR payment on IBR, PAYE, or ICR is calculated on your combined household income. File separately and only your individual income is used.⁷ Filing separately to shrink your IDR payment is a real strategy, but it costs you certain credits and deductions, including the student loan interest deduction. For some couples the loan savings win; for others the tax cost erases them. Run the numbers both ways before you file.

Applying

You can apply online at StudentAid.gov/idr or submit a paper Income-Driven Repayment Plan Request to your loan servicer.¹ The online application is faster, especially when you consent to let the Department of Education pull your tax information directly from the IRS. That same consent enables automatic annual recertification, so you don’t have to send in fresh income documents each year.⁸ If your loans are held by more than one servicer, submit a separate request to each.

Recertifying Every Year

Every IDR plan requires you to recertify your income and family size once a year. Your servicer sends a notice as the deadline nears. With IRS consent on file, recertification can happen automatically. Otherwise you’ll need to submit updated documentation before your deadline.

Miss it and the penalties differ by plan:

On IBR, your payment jumps to the 10-year Standard amount and any unpaid accrued interest capitalizes, permanently increasing the principal you pay interest on. If your recertified income has risen above the partial-financial-hardship threshold, you can lose IBR eligibility entirely. This capitalization penalty is unique to IBR.
On PAYE and ICR, your payment reverts to the 10-year Standard amount, but unpaid interest does not capitalize. Once you send in updated income information you return to income-based payments.

Submitting recertification paperwork at least 35 days before your deadline gives your servicer time to process it before your next billing cycle.

Parent PLUS Borrowers and the June 30, 2026 Deadline

Parent PLUS loans, borrowed by parents for a child’s education, do not qualify for IBR or PAYE. The only IDR route is ICR, and only after the loans are rolled into a Direct Consolidation Loan.⁴

Recent legislation set a hard cutoff. To qualify for any IDR plan, a Parent PLUS borrower must complete a Direct Consolidation Loan that is disbursed by June 30, 2026. Consolidation applications take weeks, so starting early is essential. Anyone who consolidates or borrows a new Parent PLUS loan on or after July 1, 2026, is permanently locked out of every IDR plan, and therefore locked out of Public Service Loan Forgiveness, which requires either IDR or the 10-year Standard Plan. A separate window, closing June 30, 2028, lets some already-consolidated Parent PLUS borrowers on ICR switch to IBR; after that date the switch closes for good.

Pairing IDR With Public Service Loan Forgiveness

Public Service Loan Forgiveness wipes out your remaining federal balance after 120 qualifying monthly payments (about 10 years) while you work full-time for a qualifying government or nonprofit employer. The 10-year Standard Plan technically qualifies too, but making standard payments for 10 years usually leaves nothing to forgive. IDR keeps payments low enough that a meaningful balance remains when you hit 120.⁹

Switching between qualifying IDR plans does not reset your PSLF payment count.¹⁰ Payments you made under ICR still count if you later move to IBR. Submit an employer certification form annually, or at least whenever you change jobs, so your qualifying payments are tracked as they happen.

Taxes on Forgiven Balances

Federal student loan balances forgiven under an IDR plan in 2026 or later are treated as taxable income. The American Rescue Plan Act’s temporary exclusion for forgiven student debt expired on December 31, 2025. Forgiveness this year gets reported as income on your 2026 return during the 2027 filing season.¹¹

The forgiven amount is taxed at your ordinary income rate. On a large balance the bill is real: $80,000 in forgiveness stacks on top of your regular earnings and can push you into a higher bracket for the year.

Not every kind of cancellation is taxable. PSLF, Teacher Loan Forgiveness, and discharges for death or total and permanent disability remain tax-free.¹¹ If you were insolvent at the time of forgiveness (total debts greater than the fair market value of your assets), you may be able to exclude some or all of the forgiven amount by filing IRS Form 982. State tax treatment varies, so check your state’s rules separately. If you’re approaching your 20- or 25-year mark, start setting money aside or making estimated tax payments so the bill doesn’t undo the relief.

1
Federal Student Aid. Income-Driven Repayment Plans
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Federal Student Aid. IDR Court Actions
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Consumer Financial Protection Bureau. What Are Income-Driven Repayment (IDR) Plans and How Do I Qualify
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Edfinancial Services. Income-Contingent Repayment (ICR)
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Internal Revenue Service. Adjusted Gross Income
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U.S. Department of Health and Human Services. 2026 Poverty Guidelines
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Federal Student Aid. 4 Things to Know About Marriage and Student Loan Debt
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Federal Student Aid. Income-Driven Repayment Plan Request
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Federal Student Aid. 4 Beginner Tips for Public Service Loan Forgiveness Success
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Federal Student Aid. Impacts to PSLF Eligibility if Switch IDR Plans
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Taxpayer Advocate Service. What to Know About Student Loan Forgiveness and Your Taxes