When Did Income-Driven Repayment Plans Start?

Income-driven repayment plans for federal student loans started in 1994, when the newly created William D. Ford Federal Direct Loan Program began offering Income Contingent Repayment as the first plan to tie monthly payments to a borrower’s earnings.¹ Since then, Congress and the Department of Education have layered on additional plans, each generally lowering the share of income owed and shortening the path to forgiveness. That expansion is now reversing: legislation signed in 2025 eliminates most of the existing plans by July 2028 and replaces them with a single new option.

Income Contingent Repayment, 1994

Congress created the Direct Loan Program through the Student Loan Reform Act of 1993, which amended the Higher Education Act of 1965.¹ The same law authorized ICR as a repayment option for Direct Loan borrowers.²

Under ICR, the monthly payment is the lesser of two amounts: 20 percent of discretionary income divided by 12, or the amount due under a fixed 12-year schedule adjusted by an income-based percentage the Department publishes each year.³ ICR defines discretionary income as earnings above 100 percent of the federal poverty guideline, not the 150 percent threshold used by later plans, so it counts more of your income as discretionary and produces higher payments.⁴ Any balance left after 25 years is forgiven.⁵

ICR has been the only IDR plan that accepts a Direct Consolidation Loan containing Parent PLUS debt, which for many years was the sole income-driven route for those parents.⁶

Income Based Repayment, 2009

The College Cost Reduction and Access Act of 2007 created Income Based Repayment, the second IDR plan and the first available to borrowers with older Federal Family Education Loans in addition to Direct Loans.⁷ IBR became available on July 1, 2009. The maximum monthly payment dropped to 15 percent of discretionary income, using the more generous 150 percent-of-poverty threshold, and was capped so it could never exceed what the borrower would owe on a standard 10-year schedule. Forgiveness came after 25 years.

IBR added an eligibility test that ICR lacked: partial financial hardship. A borrower qualifies only if the annual amount due under the 10-year standard plan exceeds 15 percent of the gap between adjusted gross income and 150 percent of the poverty line.

Improved IBR Terms for Borrowers After July 2014

Starting July 1, 2014, borrowers with no outstanding federal student loan balance when they took out a new loan received better IBR terms: 10 percent of discretionary income instead of 15, and 20-year forgiveness instead of 25.⁴ This 2014 version of IBR is one of only two IDR plans set to survive past July 2028.

Pay As You Earn, 2012

Pay As You Earn moved the payment rate down to 10 percent of discretionary income and cut the forgiveness timeline to 20 years. The Department published the final rule in November 2012, opened early implementation on December 21, 2012, and set the official effective date at July 1, 2013.⁸⁹

PAYE came with a strict new borrower rule. You had to have had no outstanding balance on any Direct Loan or FFEL loan when you received a new loan on or after October 1, 2007, and you had to receive a Direct Loan disbursement on or after October 1, 2011.⁴ Anyone who borrowed before those dates was shut out.

Revised Pay As You Earn, 2015

The Department published final REPAYE regulations on October 30, 2015, and borrowers could enroll starting December 17, 2015.¹⁰ REPAYE kept PAYE’s 10 percent rate but dropped the new borrower restriction, opening the lower payment to all Direct Loan holders regardless of when they first borrowed.¹¹

REPAYE split its forgiveness timeline: 20 years for borrowers with only undergraduate loans, 25 years for anyone with graduate or professional school debt.³ It had no partial financial hardship test, so higher earners could enroll, but it also did not cap payments at the 10-year standard amount.

Saving on a Valuable Education, 2023

In July 2023, the Department finalized regulations that overhauled REPAYE and renamed it the Saving on a Valuable Education plan. SAVE offered the most borrower-friendly terms of any IDR plan to date: payments on undergraduate loans dropped to 5 percent of discretionary income, the income protection threshold rose from 150 percent to 225 percent of the poverty guideline, and an interest subsidy prevented balances from growing when payments didn’t cover monthly interest.

Legal challenges blocked SAVE’s implementation. A federal court order issued in March 2026 prevents the Department from administering the plan, and borrowers who enrolled in or applied for SAVE were placed in forbearance while the litigation played out.¹² As of 2026, those borrowers must pick a different plan or their servicer will move them to one; the available alternatives while the court order stands are IBR, ICR, and PAYE.

The Repayment Assistance Plan, 2026

The reconciliation bill signed into law on July 4, 2025 (P.L. 119-21) created a new plan called the Repayment Assistance Plan, which becomes available on July 1, 2026.¹³ RAP works differently from every earlier IDR plan:

Payments are calculated from total adjusted gross income, not “discretionary income.” There is no poverty-line subtraction.
The payment percentage ranges from 1 to 10 percent of AGI on a sliding scale, increasing one point per $10,000 of income. Borrowers earning $10,000 or less pay a flat $10 per month.
Monthly payments are reduced by $50 for each dependent.
Remaining balances are forgiven after 360 qualifying payments, roughly 30 years.
Monthly interest that goes unpaid after your payment is applied is not charged to you.
If your payment covers less than $50 in principal, the government provides a matching principal contribution equal to the lesser of $50 or your total payment.

RAP is available for Direct Subsidized and Unsubsidized Loans, Direct Graduate PLUS Loans, and Direct Consolidation Loans. Parent PLUS Loans and Consolidation Loans that include Parent PLUS debt are not eligible.¹³ Because ICR (the only previous IDR option for consolidated Parent PLUS borrowers) is being eliminated, that exclusion leaves those parents without an income-driven option unless Congress acts.

Which Plans Survive After July 2028

The 2025 law eliminates ICR, PAYE, and SAVE by July 1, 2028. Borrowers still enrolled in any of those plans on that date will be moved automatically to a surviving plan. What remains depends on when you first borrowed:

Loans taken out only before July 1, 2014: choose between original IBR (15 percent of discretionary income, 25-year forgiveness) and RAP.
Loans taken out only between July 1, 2014 and July 1, 2026: choose between 2014 IBR (10 percent, 20-year forgiveness) and RAP.
Any loans taken out on or after July 1, 2026: RAP is the only IDR option, even if you also carry older loans.

For borrowers who take out new federal loans in 2026 or later, RAP will be the only income-driven plan they ever see.¹³

IDR Timeline at a Glance

1993–1994: Student Loan Reform Act creates the Direct Loan Program and authorizes Income Contingent Repayment (20 percent of discretionary income, 25-year forgiveness).
2007: College Cost Reduction and Access Act creates Income Based Repayment (15 percent, 25 years). IBR becomes available July 1, 2009.
2012: Pay As You Earn becomes available in December through early implementation (10 percent, 20 years). Restricted to new borrowers.
2014: New borrowers after July 1 get improved IBR terms (10 percent, 20 years).
2015: Revised Pay As You Earn launches in December. Removes the new borrower restriction.
2023: REPAYE is renamed and overhauled as SAVE (5 percent for undergraduate debt, expanded income protection).
2025: Courts block SAVE. P.L. 119-21 creates RAP and schedules elimination of ICR, PAYE, and SAVE by July 2028.
2026: RAP becomes available July 1 (1–10 percent of AGI, 30-year forgiveness).
2028: ICR, PAYE, and SAVE end July 1. Only IBR (original and 2014 versions) and RAP remain.

1
Federal Student Aid. Overview of the Direct Loan Program
2
Office of the Law Revision Counsel. 20 USC 1087e – Terms and Conditions of Loans
3
eCFR. 34 CFR 685.209
4
Federal Student Aid. Income-Driven Repayment Plans
5
Government Publishing Office. Higher Education Act of 1965
6
Federal Student Aid. What to Know About Federal Family Education Loan (FFEL) Program Loans
7
Congress.gov. College Cost Reduction and Access Act
8
Government Publishing Office. Federal Register Vol 77 No 212 – Pay As You Earn Repayment Plan
9
Federal Student Aid. Implementation of Pay As You Earn Repayment Plan
10
Federal Student Aid. Availability of Revised Pay As You Earn Plan
11
Federal Student Aid. Final Regulations for the Revised Pay As You Earn Plan
12
Federal Student Aid. IDR Court Actions
13
Congressional Research Service. The Repayment Assistance Plan in P.L. 119-21