The Ministry of Education announced in December that it would resume two retired income-driven repayment plans, a payroll (PAYE) plan, and an income group repayment (ICR) plan. The plan will remain open until July 1, 2027, as an alternative to savings in the valuable education (SAVE) plan. The Save Plan is the latest and most generous federal loan repayment plan, but has been tied up in lawsuits since the summer.
Borrowers registered with Save are suspended for extended payments. During this tolerance, no payment is required. Furthermore, there is no interest. However, these months do not count towards certain exemption program requirements, such as Public Service Loan Forgiveness (PSLF). Borrowers registering for the new plan will need to resume payments, but these payments will count towards the allowance requirements. However, it is important to understand that student loan forgiveness is currently blocked under PAYE and ICR.
Which student loan repayment plans are available?
These two revenue-driven repayment plans, created in 2012 and 1996, were originally phased out in the summer of 2024 and replaced by Save. Compared to the SAVE plan, the other two available options cost most borrowers monthly.
Pay as you earn (Pay)
The PAYE plan is based on monthly federal student loan payments based on 10% of your discretionary income. In this plan, discretionary income is defined as the difference between annual income and poverty guidelines 150%. Compared to ICR, PAYE lowers monthly payments to most borrowers. A single borrower will not pay anything up to the initial $22,590 income. They pay 10% of their discretionary income beyond that amount.
Income-driven repayment (ICR)
ICR plans help reduce federal student loan payments either 20% of your discretionary income or the amount you pay for 12 years on a fixed repayment plan. Under ICR, your discretionary income is a 100% difference between annual income and poverty guidelines. Up to the first $15,060 of income, a single borrower will pay $0. They pay 20% of their income beyond that amount.
In other words, when ICR is used, much of your income is considered “discretionary.” It also owes more share.
The ICR plan is also the only repayment plan available to parents and borrowers (after consolidating into a direct consolidated loan).
Save valuable education (save)
Under the Save Plan, you will pay just 5% of your discretionary income. The plan defines discretionary income the most generous of the three. This is the difference between annual income and poverty guidelines by 225%. A single borrower will pay $0 up to the initial $32,800 income. They pay 5-10% of income above that amount, based on their original balance.
Compare repayment plan options
All three options are income-driven repayment plans (IDR) types. Don’t forget that each defines discretionary income in a different way, affecting the size of your monthly payments.
| Plan | Payment based on | Repayment period | Do you qualify for forgiveness? | Eligible loans |
| payment | 10% of discretionary income | 20 years | yes | Both received on or after October 1, 2007 are direct or consolidated federal family education loans (FFEL) |
| ICR | Of 20% of discretionary income, or the amount paid for 12 years on a fixed payment plan (in line with income) | 25 years | yes | Direct loans, direct plus loans, direct integrated loans (including loans made to parents) |
| keep | 5-10% of discretionary income |
|
yes | Direct Loans, Direct Plus Loans, Direct Integrated Loans (not including loans made to parents), FFEL, FFEL Plus, Perkins Loans (if integrated) |
Do I need to sign up for a different student loan repayment plan?
Borrowers can only suspend save plans and extended payments for now. However, many experts predict that after inaugurated President Donald Trump, at least removes support for the pending lawsuit, will eliminate savings plans. Without choosing to sign up for another program, it’s best to research your options in case you’re looking for them in the future.
If you are able to make student loan payments and would like to earn credit for student loan forgiveness, we recommend that you consider signing up for a different payment plan, especially if you meet the requirements. For forgiveness of a public service loan, you must make 120 eligible payments before you can grant the remaining loan.
In a recent interview, leading student loan expert Mark Kantrowitz explained that borrowers who stay on save plans are not losing money, but they are losing time. To regain that time, he says that borrowers who are being forgiven may want to look into other income-driven repayment plans despite the potential for an increase in monthly payments.
For borrowers who want to stay on their save plans but want to earn credits to PSLF, there is another option. Through the Department of Education’s PSLF Buy Back program, borrowers can “buy back” months of credit. To do this, you will need to submit a request and make a payment equal to the monthly payment time. Imagine your loan has been forgiving for two months. If you pay $150 each month and want to buy back those two months, you will need to pay $300.
How do I sign up for a PAYE or ICR plan?
Borrowers not registered with an IDR plan or interested in registering with another plan can be applied to dustentaid.gov/idr. To fill out the application, you need to:
- StudentAid.gov account information.
- Verified FSA ID.
- Your financial information including tax returns.
- Personal information including contact information.
- spouse information, if applicable.
- Approximately 10 minutes to fill out the application.
The Ministry of Education says borrowers may be tolerated for up to 60 days, but the servicer will process the application. During this period, payments are unlimited and no interest is accrued, but unlike the generosity of savings, time counts as forgiveness.
