Income-Based Repayment (IBR): How It Works, Who Qualifies, and What Changed

IBR is a federal student loan repayment plan that sets your monthly payment at 10% or 15% of your discretionary incomeDiscretionary IncomeFor federal income-driven repayment plans, a borrower's adjusted gross income minus a set percentage of the federal poverty guideline for their family size. Monthly IDR payments are calculated as a percentage of this amount., depending on when you first borrowed. Any remaining balance is forgiven after 20 or 25 years.

• No more hardship test. The partial financial hardshipPartial Financial HardshipA federal eligibility standard used historically for IBR and PAYE, where a borrower qualifies if their calculated IDR payment is lower than the payment they would owe under a 10-year Standard Repayment Plan. requirement was removed in 2025. Any borrower with eligible loans can now enroll regardless of income.
• IBRIncome-Based Repayment (IBR)A federal income-driven repayment plan that caps monthly payments at 10% or 15% of discretionary income, depending on when the loans were taken out. Remaining debt is forgiven after 20 or 25 years of qualifying payments. is permanent. Unlike PAYE and ICRIncome-Contingent Repayment (ICR)The oldest federal income-driven repayment plan, with payments generally set at 20% of discretionary income or a fixed 12-year amount, whichever is lower. It is the only IDR plan available to Parent PLUS borrowers after consolidation., which sunset in July 2028, IBR stays open indefinitely.
• Payments are capped. Your monthly payment can never exceed the 10-year Standard Repayment amount — even if your income rises significantly.
• FFEL borrowers qualify directly. IBR is the only income-driven plan that accepts FFEL loans without requiring consolidation into a Direct LoanDirect LoanA federal student loan made directly by the U.S. Department of Education under the William D. Ford Federal Direct Loan Program. Most federal student loans issued since 2010 are Direct Loans. first.

What IBR Is — and Where It Fits in 2026

Income-Based Repayment is one of two income-driven repayment plans that will exist long-term. The other is the Repayment Assistance Plan (RAP), which launches July 1, 2026.

IBR comes in two versions. Old IBR applies to borrowers who had loans before July 1, 2014 — payments are 15% of discretionary income with forgiveness after 25 years. New IBR applies to borrowers who first borrowed on or after July 1, 2014 — payments are 10% of discretionary income with forgiveness after 20 years. Both versions cap your payment at the 10-year Standard Repayment amount.

In 2025, Congress passed the One Big Beautiful Bill Act (OBBBA), which terminated the SAVE planSAVE Plan (SAVE)The Saving on a Valuable Education Plan, a federal income-driven repayment plan introduced in 2023 to replace REPAYE. Its implementation has been subject to ongoing litigation, and enrolled borrowers have faced court-ordered forbearance periods., created RAP, and removed the partial financial hardship requirement from IBR. As of March 2026, the SAVE plan has been vacated by court order. PAYEPay As You Earn (PAYE)A federal income-driven repayment plan that caps monthly payments at 10% of discretionary income and forgives remaining debt after 20 years. It is only available to borrowers who took out their first federal loans on or after October 1, 2007. and ICR remain available until July 1, 2028, but no new borrowers will be able to access them after that date. After July 2028, the only two IDRIncome-Driven Repayment (IDR)A category of federal student loan repayment plans that calculate monthly payments based on income and family size rather than loan balance. Any remaining balance can be forgiven after 20–25 years of qualifying payments. plans will be IBR and RAP.

If your loans were first disbursed on or after July 1, 2026, IBR is not available to you — your only IDR option is RAP. IBR is reserved for borrowers with pre-July 2026 loans who elect the plan before July 1, 2028.

Who Qualifies for IBR in 2026

You qualify for IBR if you have eligible federal student loans disbursed before July 1, 2026. There is no income test.

Eligible loan types

Direct Loans — Subsidized, Unsubsidized, and Direct Consolidation Loans (that do not include Parent PLUS loans) all qualify.

FFEL Program loans — Stafford Loans and FFEL Consolidation Loans qualify for IBR directly. IBR is the only IDR plan that accepts FFEL loans without requiring you to consolidate into a Direct Loan first.

Parent PLUS loans do not qualify for IBR — even if consolidated. A Direct Consolidation Loan that includes Parent PLUS loans is only eligible for ICR, and only if you consolidate before June 30, 2026.

Private student loans are not eligible for any federal repayment plan, including IBR.

The partial financial hardship requirement is gone

Before the OBBBA, you could only enroll in IBR if your calculated IBR payment was lower than your payment under the Standard 10-year plan. This was called a partial financial hardship (PFH) — and it effectively screened out borrowers with higher incomes or smaller balances.

Congress removed PFH from IBR on July 4, 2025. The requirement no longer exists. Any borrower with eligible loans can now enroll regardless of income. If you applied for IBR before July 2025 and were denied because you lacked a partial financial hardship, you can reapply now.

The enrollment deadline

You must elect IBR before July 1, 2028. After that date, PAYE and ICR will have sunset, and the only IDR plans for legacy borrowers will be IBR and RAP. If you’re currently on PAYE or ICR, you’ll need to choose between IBR and RAP by that deadline.

How Your IBR Payment Is Calculated

Your payment is based on discretionary income — your adjusted gross incomeAdjusted Gross Income (AGI)A borrower's total taxable income minus specific deductions, as reported on a federal tax return. Federal income-driven repayment payments are generally calculated using AGI. (AGI) minus 150% of the federal poverty guideline for your household size.

The formula:

• Start with your AGI. This is the number from your most recent tax return (or current income documentation if your income has changed).
• Subtract 150% of the poverty guideline. For a single borrower in the continental U.S., the 2025 guideline is $15,650, so 150% is $23,475. For a household of two, 150% is $31,725. For a household of four, 150% is $48,225. The result is your discretionary income.
• Multiply by 10% or 15%. New IBR borrowers (loans first disbursed on or after July 1, 2014) pay 10%. Old IBR borrowers pay 15%.
• Divide by 12. That’s your monthly payment.

Worked example: You’re single, earning $50,000/year, and you borrowed after July 2014 (New IBR).

• AGI: $50,000
• 150% of poverty guideline (single): $23,475
• Discretionary income: $50,000 − $23,475 = $26,525
• Annual payment: $26,525 × 10% = $2,652.50
• Monthly payment: $221

If your income falls below 150% of the poverty guideline, your discretionary income is zero and your payment is $0.

Related: IBR Payment Calculator

The payment cap

IBR caps your monthly payment at the amount you would owe under the 10-year Standard Repayment PlanStandard Repayment PlanThe default federal repayment plan, which spreads loan payments evenly over 10 years — or up to 30 years for consolidation loans. It usually results in the lowest total interest paid among federal plans., calculated at the time you first entered IBR. RAP has no equivalent cap.

Even if your income rises over time, your payment stays at or below that Standard amount — and forgiveness credit continues to accrue.

If your income drops again, your payment recalculates downward based on the formula. The cap is a ceiling, not a floor.

Spouse income and filing status

If you file taxes jointly, both your income and your spouse’s income are included in the calculation. Filing separately limits the calculation to your income alone, which can lower your payment — but it may increase your combined tax liability.

Related:

• Does Spouse Income Count for Student Loan Repayment?
• Does Married Filing Separately Affect Student Loans?

If your income changes significantly mid-year — a pay cut, job loss, or parental leave — you don’t have to wait for annual recertification. You can submit updated income documentation to your servicer and request an immediate payment recalculation.

How to Apply and What Documents You Need

You apply through your loan servicerLoan ServicerThe company that manages a borrower's federal student loan account, processes payments, and handles applications for repayment plans, deferment, forbearance, and forgiveness on behalf of the U.S. Department of Education. or at StudentAid.gov using the Income-Driven Repayment Plan Request form. If you’re switching from another plan, the same form applies.

The documentation you need depends on your employment status:

• Employed: Submit a recent pay stub or your most recent tax return. A pay stub may better reflect current income if your tax return includes a one-time bonus, stock sale, or severance payout that inflated your AGI.
• Self-employed: Provide a signed statement certifying your income, or your tax return if it accurately reflects current earnings. If you pay yourself through payroll, a pay stub works.
• Retired: Submit your Social Security benefits statement or documentation of pension or retirement distributions. Only the taxable portion of these benefits counts toward the payment calculation.
• Unemployed or a stay-at-home parent: Provide a statement declaring $0 income. If you’re married and file jointly, include your spouse’s income documentation as well.

After enrollment, you must recertify your income and family size every 12 months. If you miss the recertification deadline, your payment resets to the amount you would owe under the Standard Repayment Plan, and any accrued outstanding interest capitalizes — meaning it is added to your principal balance. If recertification processing is delayed, you can request administrative forbearance to keep your account current while you wait.

Why You Can't Qualify for IBR — and What to Do

If your IBR application was denied, the cause is almost always one of three things.

Your loans aren’t eligible. Parent PLUS loans, private loans, and unconsolidated Perkins loans don’t qualify for IBR. If you have Parent PLUS loans and want income-driven payments, your only option is ICR — and you must consolidate before June 30, 2026, to access it. After that date, consolidated Parent PLUS borrowers lose access to IDR entirely.

Documentation problems. Missing or outdated income documentation commonly causes denial or processing delays. If you’re married and file jointly, you need to include your spouse’s income. If you selected the wrong plan on the application form, your servicer may process you into a plan you didn’t intend to select. Double-check that you’ve selected IBR specifically and that your income documentation matches your current situation.

You were denied before July 2025 for not having a partial financial hardship. That requirement no longer exists. If you were previously told you couldn’t enroll because your income was too high relative to your loan balance, reapply. The PFH test was removed by the OBBBA, and you are now eligible regardless of income.

If IBR doesn’t fit your situation — because your loans are ineligible or you borrowed after July 1, 2026 — the Repayment Assistance Plan is the primary alternative. RAP has different mechanics (percentage of full AGI rather than discretionary income, no payment cap, 30-year forgiveness) but is available to any borrower with eligible federal loans.

IBR Forgiveness and What Comes Next

Your remaining balance is forgiven after 20 years of qualifying payments (New IBR) or 25 years (Old IBR). Months don’t need to be consecutive — time in deferment or forbearance doesn’t count, but you don’t lose the months you’ve already accumulated.

Related: IBR Loan Forgiveness

Forgiven amounts were tax-free through December 31, 2025, under the American Rescue Plan Act. For forgiveness that posts on or after January 1, 2026, the forgiven balance may be treated as taxable income unless Congress extends the exclusion or you qualify for an insolvency exception.

IBR payments also count toward Public Service Loan ForgivenessPublic Service Loan Forgiveness (PSLF)A federal program that forgives the remaining balance on Direct Loans after 120 qualifying monthly payments made while working full-time for a government or qualifying nonprofit employer. (PSLF), which forgives the remaining balance after 120 qualifying payments while working for an eligible public service employer. If you’re pursuing PSLF, IBR’s lower payments can reduce what you pay before the 10-year forgiveness mark.

The IBR-to-RAP decision

RAP launches July 1, 2026. If you’re currently in IBR, you do not need to switch — IBR remains available permanently. But you may want to compare the two plans, especially if you have a long time remaining before forgiveness.

IBR’s advantages: $0 payments when income is low, a payment cap when income is high, and a shorter forgiveness timeline (20 or 25 years vs. RAP’s 30 years). RAP’s advantages: an interest waiver on every on-time payment, a principal reduction feature, and a lower payment rate for lower-income borrowers.

The right choice depends on your income trajectory, how close you are to forgiveness, and whether you’re pursuing PSLF.

Related: IBR vs. RAP

If you were on SAVE before it was terminated, you have a 90-day window starting July 1, 2026, to select a new plan. IBR and RAP are the primary choices. If you don’t act within that window, you’ll be auto-enrolled into Standard Repayment or the new Tiered Standard Plan.

Related: What Happens to IBR and SAVE Borrowers When RAP Starts