My IDR Student Loan Payment is $0. Now What?
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By Mark Kantrowitz

June 5, 2020

Income-driven repayment plans base the loan payments on a percentage of the borrower’s discretionary income, as opposed to the amount owed.

Enrolling in an income-driven repayment plan can help lower a federal student loan borrower’s monthly payment. In some cases, your payment could even be $0 per month. During our webinar about Student Loans 101 (Repaying), a borrower with a $0 monthly loan payment asked what they should do next:

My income-driven repayment plan has a $0 monthly loan payment. What would you suggest I do next or will the loan be forgiven?

An income-driven repayment plan will have a zero monthly loan payment if the borrower’s income is less than 150% of the poverty line. 

A zero calculated monthly loan payment still counts as a payment toward loan forgiveness.

If the borrower persists with low or zero calculated monthly loan payments for most of the repayment term, the remaining debt will be forgiven. 

The repayment term is 20 or 25 years, depending on the type of income-driven repayment, but is reduced to 10 years if the borrower qualifies for public service loan forgiveness.

The loan forgiveness after 20 or 25 years in an income-driven repayment plan is treated as taxable income to the borrower, unlike the loan forgiveness after 10 years in public service loan forgiveness. Borrowers who anticipate having a lot of debt forgiven should save money to cover the future tax bill, if they are able. 

Income-Driven Repayment Calculators

Income-driven repayment plans base the monthly student loan payment on a percentage of the borrower’s discretionary income, as opposed to the amount they owe. These calculators compare the monthly loan payments and total payments for each of the income-driven repayment plans. The calculators also evaluate the cost of the income-driven repayment plans under public service loan forgiveness.

  • Income-Contingent Repayment Calculator (ICR). Income-contingent repayment bases the monthly payment on 20% of discretionary income, which is defined as the amount by which income exceeds 100% of the poverty line, with a 25-year repayment term.
  • Income-Based Repayment Calculator (IBR). Income-based repayment bases the monthly payment on 15% of discretionary income, which is defined as the amount by which income exceeds 150% of the poverty line, with a 25-year repayment term.
  • Pay-As-You-Earn Repayment Calculator (PAYE). Pay-as-you-earn repayment bases the monthly payment on 10% of discretionary income, which is defined as the amount by which income exceeds 150% of the poverty line, with a 20-year repayment term.
  • Revised Pay-As-You-Earn Repayment Calculator (REPAYE). Revised pay-as-you-earn repayment bases the monthly payment on 10% of discretionary income, which is defined as the amount by which income exceeds 150% of the poverty line. The repayment term is 20 years for borrowers with just undergraduate loans and 25 years for borrowers with at least one graduate loan.

A good place to start:

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