The Department of Education (ED) has reopened applications for income-driven repayment (IDR) plans, allowing federal student loan borrowers to reduce their monthly payments based on income.

This follows a temporary suspension that left many borrowers uncertain about their repayment options. With applications now back online, borrowers can apply for one of three IDR plans: Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR).

If your loan payments are too high under the standard repayment plan, now is the time to explore these options.

Why Were IDR Applications Paused?

On February 26, 2025, the Department of Education removed IDR applications from the Federal Student Aid website. This was in response to a February 18 ruling by the 8th Circuit Court of Appeals, which placed an injunction on President Joe Biden’s Saving on a Valuable Education (SAVE) plan.

As a result, the Trump administration directed loan servicers to halt the processing of new IDR applications. The decision faced immediate backlash from advocacy groups, including the American Federation of Teachers (AFT) and the Student Borrower Protection Center, which argued that this move illegally blocked borrowers from accessing more affordable payment options.

On March 19, the AFT sued the administration, claiming it had misinterpreted the court ruling. After weeks of pressure, the Department of Education announced on March 27 that IDR applications were being restored with adjustments to comply with the court’s ruling.

For borrowers who were affected by the pause, applications are now available once again, and those needing lower payments should apply as soon as possible.

Which Income-Driven Repayment Plans Are Available?

Income-driven repayment plans adjust your monthly payment based on your income and family size. Here’s a breakdown of the three IDR plans currently available.

1. Income-Based Repayment (IBR)

Who qualifies?

• Available for Direct Subsidized, Direct Unsubsidized, and Family Federal Education Loans (FFEL)
• Designed for borrowers with moderate to high debt relative to income

How much will you pay?

• 10% of discretionary income (for new borrowers after July 1, 2014)
• 15% of discretionary income (for borrowers with loans from before July 1, 2014)
• Your payment will never exceed what you’d pay on a 10-year standard repayment plan

How is discretionary income calculated?

• Your discretionary income is the amount you earn above 150% of the federal poverty guideline
• For a single borrower in 2025, 150% of the poverty guideline is $35,213

Example Payment Calculation:

• A borrower earning $75,000 per year would pay approximately $185 per month under IBR, a significant reduction from standard repayment amounts.

2. Pay As You Earn (PAYE)

Who qualifies?

• Available for borrowers with Direct Loans
• You must be a new borrower (meaning no loans before October 1, 2007)
• You must have taken out a Direct Loan on or after October 1, 2011

How much will you pay?

• 10% of discretionary income
• Payments will never exceed the 10-year standard repayment plan

Key benefits:

• Borrowers can receive loan forgiveness after 20 years of payments
• Often the best option for those with low income and high student debt

3. Income-Contingent Repayment (ICR)

Who qualifies?

• Available for all Direct Loans, including Parent PLUS Loans (if consolidated)

How much will you pay?

• 20% of discretionary income or
• The amount you’d pay on a 12-year fixed repayment plan, adjusted for income (whichever is lower)

Key benefits:

• The only IDR plan available for Parent PLUS Loan borrowers after consolidation
• May offer lower payments for borrowers with higher incomes

How to Apply for an IDR Plan

Borrowers can apply for an income-driven repayment plan by following these steps:

1. Log in to your account at Federal Student Aid (studentaid.gov) or visit your loan servicer’s website.
2. Submit an IDR application online or request a paper form if needed.
3. Provide income verification, using the IRS Data Retrieval Tool if available.
4. Choose your preferred IDR plan or allow your loan servicer to select the lowest-payment option.
5. Recertify your income annually to remain eligible for reduced payments.

If you were affected by the February 26 pause, it is recommended that you confirm your application status with your loan servicer.

Why IDR Plans Are More Important Than Ever

As student loan payments resumed in late 2024, many borrowers have been seeking ways to lower their financial burden.

• More than 8 million borrowers were enrolled in IDR plans before the recent pause.
• Over 4 million borrowers are now on the SAVE plan, which is currently blocked due to legal challenges.
• The average student loan balance is $37,000, making reduced monthly payments essential for many.

According to Mike Pierce, executive director of the Student Borrower Protection Center, income-driven repayment plans are a lifeline for borrowers struggling to afford payments. With applications open again, borrowers should act quickly to explore their options.

Should You Switch to an IDR Plan?

If your monthly student loan payments are unmanageable, switching to an IDR plan could help. These plans can reduce payments to as little as $0 per month for low-income borrowers and lead to loan forgiveness after 20–25 years.

‍