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Student loans

Income-driven repayment (IDR)

IDR stands for income-driven repayment: a federal student loan repayment plan that bases the monthly payment on the borrower's income and family size or number of dependents. 1

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What does IDR mean for your student loans?

Income-driven repayment is not part of bankruptcy. It is a way to lower federal student loan payments, and for some people the payment can be as low as $0 per month. Borrowers must update their income and family size each year. 1

StudentAid.gov lists these plans: the Repayment Assistance Plan (RAP), Income-Based Repayment (IBR), Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE). Not every borrower is eligible for every plan, and the One Big Beautiful Bill Act ends the ICR and PAYE plans no later than July 1, 2028. Because the plans are changing, check StudentAid.gov for what is open to you now. 1 2

New borrowing changes the options. Federal Student Aid says a borrower who receives a first disbursement on a new loan on or after July 1, 2026 loses eligibility for IBR, ICR and PAYE, and eligible loans have access to RAP. 3

After the required number of qualifying payments over 20, 25 or 30 years, depending on the plan, any remaining balance may be discharged. Lower payments usually mean more interest over time, and under current IRS rules income tax may be owed on the discharged amount. Loans in default are not eligible for these plans. 1

In a bankruptcy student loan case, Justice Department attorneys look at whether the debtor made good-faith efforts to repay. Not enrolling in an income-driven plan does not automatically disqualify a debtor. 4

Common questions

Do I have to try income-driven repayment before asking for a discharge in bankruptcy?

Under the Justice Department guidance, not enrolling in an income-driven plan does not automatically disqualify a debtor. Student loans are discharged only if repaying them would be an undue hardship. 4 5

Is the SAVE plan still available?

Federal Student Aid says that on March 10, 2026 a federal court order stopped the Education Department from implementing the SAVE Plan, and that borrowers in forbearance because they enrolled in or applied for SAVE must select a new repayment plan. 6

How do I apply?

Online at StudentAid.gov or with a paper form. If you apply on paper and more than one servicer holds your loans, each servicer needs its own request. 1

Sources

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