What is it? An income-driven repayment plan ties your monthly federal student loan payment to your income. It helps ensure that you’re only being charged an amount that you can afford. For some people, the monthly payments are $0.
Why should I do it? It’s important to enroll in an income-driven repayment plan if you’re having trouble keeping up with your federal student loan payments. The plans help you avoid falling behind or going into default. Going into default generally means that you have not made a payment in more than 270 days. If this happens, your wages may be garnished without a court order. You could lose out on your tax refund or Social Security check. Your credit score could suffer.
Am I eligible? If you have a federal student loan, you are likely eligible. One major exception is if you have Parent PLUS loans (in which case you will want to talk to an expert for individualized advice on how to enroll for an income-driven repayment plan). A Parent PLUS loan is a student loan taken out by a parent to finance their child’s education. If you have private student loans (loans offered by the school, a bank, or other financial institution and not backed by the federal government) you are not eligible for the federal income-driven repayment plans. If you have private loans, you will need to contact your specific lender to see if they offer any options as to those specific loans.
How do I apply? In less than 10 minutes, you can enroll! We have a step-by-step guide that is available here.
- There are several options for income-driven repayment plans, which you can review here: https://studentaid.gov/manage-loans/repayment/plans/income-driven.
- You can apply for a plan online at: https://studentaid.gov/app/ibrInstructions.action. When you apply, you can check a box that tells your loan servicer to choose the plan with the lowest monthly payment. Your loan servicer is the company that you interact with regarding your student loans. They’re the company that collects the payments from you (examples include Navient or Great Lakes). Alternatively, you can send a physical copy of the application to your loan servicer.
- Once you’re enrolled, you’ll need to verify your income each year. If you want to re-verify your income online, you can do so at the same website above. If you want to re-verify your income on paper, then you will need to work with your loan servicer to do so.
What if I consolidated my loans or plan to consolidate them? If you only have federal loans, then consolidation could impact the type of IDR plan you’re eligible for. If you consolidate a private loan with a federal loan, you would be doing so with a private lender and would lose your eligibility for a federal IDR plans.
What if I have more questions? If you have questions about what type of loans you have, how to apply, or which plan is right for you, you should contact your loan servicer or call the Federal Student Aid Ombudsman Group at the Department of Education at 1-877-557-2575. You can also book an appointment with an advisor at College Now Greater Cleveland. Their website is: https://www.collegenowgc.org/adult-programs-and-services/.
Updated January 7, 2025