Last week we touched on the basics of the Income-Based Repayment Plan (IBR). This week we are going to be touching on the basics of the Income - Contingent Repayment Plan (ICR).

ICR is the final income-based repayment option. Under ICR your student loan payment is the lesser of 20% of your discretionary income or the amount that you would be paying on a fixed payment plan over the course of 12 years, adjusted according to your income. Under ICR your repayment period is generally 25 years, unless you’re eligible for Public Service Loan Forgiveness (PSLF) then it’s forgiven after 120 payments. After 25 years, any remaining balance will be forgiven. As with PAYE, REPAYE, and IBR discussed in prior weeks, the loan amount that is forgiven at the end of your repayment period will be considered taxable income unless the balance is forgiven as a result of PSLF.

You will need to re-certify your income and family size every year in order to get your payments to be based on your income. If your income increases over time it’s possible that your payment will end up being higher than it would be under the 10-year standard repayment plan.

NOTE: ICR is the only repayment plan that Parent PLUS Loan borrowers can participate in if their loans are consolidated into a Federal Direct Consolidation Loan.