Income-Driven Repayment (IDR) Income Limits

Income-Driven Repayment (IDR) Income Limits

Read on to learn about how income limits pertain to IDR plans, including enrollment thresholds, requirements, the advantages of IDR for low-income individuals, and what happens when your income grows beyond the initial requirements of your IDR plan.

Published October 03, 2023

5 min read

Why your income matters for IDR
What are the income requirements for IDR?
When your income outgrows your plan
IDR will grow with you

Income-Driven Repayment (IDR) plans are highly beneficial student loan tools that adjust your monthly payments according to your income and family size. Each IDR plan operates differently, but they all aim to make student loan repayment more manageable – and more affordable. Since borrowers may remain enrolled in their chosen IDR plan for decades, it’s important to understand what happens within each plan as your income changes throughout your career.

Why your income matters for IDR

Income-Driven Repayment is designed to make student loan repayment more manageable by tailoring monthly payments to the borrower’s income and family size. These plans can be a financial lifesaver for those with lower incomes, especially new graduates starting their careers, as they adjust monthly payments to what is affordable. IDR plans are particularly beneficial for individuals with substantial student loan debt relative to their income, as they serve the dual purpose of facilitating debt repayment and preventing financial distress.

What are the income requirements for IDR?

Each IDR plan has unique enrollment requirements, which may not link to a specific salary (there is no “maximum income” threshold) but are implicitly tied to your income level, so certain plans wouldn’t make sense for some income brackets. Suitability for each plan largely depends on your income relative to your federal student loan debt.

Learn more about each plan with our complete guides to:

Generally, for initial eligibility, your calculated monthly payment must be less than what you would pay under the Standard Repayment Plan (a 10-year period of fixed payments) to ensure the IDR program makes sense for you.

IDR Comparison Chart

Plan	Monthly Payments	Repayment Period	Status
Income-Based Repayment (IBR)	10-15% of your discretionary income (and your spouse’s if filing jointly) Never more than federal 10-year Standard Repayment Plan amount	20-25 years, depending on when you become a new borrower	Remains available but borrowers cannot select plan after 60 payments on REPAYE that occur on/after July 1, 2024
Pay as You Earn (PAYE)	10% of your discretionary income (and your spouse’s if filing jointly) Never more than federal 10-year Standard Repayment Plan amount	20 years	Not accepting new enrollments as of July 2023
SAVE (formerly REPAYE)	5% of discretionary income for Undergraduate Loans 10% of discretionary income for Graduate Loans Weighted average for borrowers who have both	10 years for low-balance borrowers (less than $12,000) 20 years for only undergraduate loans 25 years for any Graduate Loans	This plan replaces REPAYE
Income-Contingent Repayment (ICR)	The lesser of the following: 20% of your discretionary income or What you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income	25 years	Not accepting enrollments for current students; only available to future borrowers with consolidated Parent PLUS loans

When your income outgrows your plan

Each year, you must recertify your income and other changes with your loan servicer to remain enrolled in IDR, and so there may come a time over the 10 to 25 years of your repayment plan when your income outgrows the original qualifications of your plan. But don’t be alarmed that you’ll suddenly have a student loan payment you can’t afford. If your adjusted payment would no longer qualify you for your plan (for instance, due to a jump in income, your calculated payment would be larger than the Standard Repayment Plan amount), the following adjustments to your plan would take place:

IBR and PAYE

Under ICR and the current version of SAVE, your payment is always income-based, so you could wind up paying more than you would under the Standard Repayment Plan. In this case, it could make sense to switch to a different IDR plan or repayment strategy.

However, as SAVE still offers the lowest monthly payments based on discretionary income, it could remain the right plan for many borrowers even when factoring in an income increase, especially with the changes that are slated to go into effect in July 2024 that will further reduce payment amounts from 10% to 5% of discretionary income.

It’s also important to note that for low-balance borrowers, the forgiveness timeline under SAVE is much shorter (as short as 10 years for certain loan balances, effective July 2024), and so an increased income could speed up your timeline and potentially impact your ultimate forgiveness amount.

ICR and SAVE

IDR will grow with you

Don’t let the complexities of possible income limits deter you from exploring the benefits of IDR. Contact our team of experts for a comprehensive consultation and let us help you make informed decisions about your student loan repayment choices, tailored to your unique financial circumstances. Make the most of your educational investment by navigating the world of student loans with confidence.

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