Last week we touched on the basics of the Extended Repayment Plan. This week we are going to cover the basics of the Income-Sensitive Repayment Plan.

The Income-Sensitive Repayment Plan is for low-income student loan borrowers who have FFEL loans. Any loans issued after 2010 are not eligible for this repayment plan. Under this repayment plan, your monthly payments are based on a percentage of your income, usually between 4% and 25% but the payment will always be at least the amount of interest that accrues on the student loan.

There is no loan forgiveness with this option and the loan has a 10 year repayment period. Because of this, your payments might start out lower than they would under the 10-year standard repayment plan but the payment will increase as the years go by unless you switch to an income-driven repayment plan.

This type of repayment plan is best for people who need lower student loan payments for a short period of time.