Student Debt Resource

7: Income-Contingent Repayment (ICR) Plan

/ Student Debt E-book

The ICR plan is the oldest IDR plan and payments under this plan tend to be higher than in other income-driven repayment plans. However, this plan is good for some borrowers. Most significantly, this is the only IDR plan that is accessible to borrowers with Parent PLUS loans and is their only path to earning Public Service Loan Forgiveness. In order to enroll in ICR and be eligible for Public Service Loan Forgiveness, borrowers must first consolidate their Parent PLUS loans into a Federal Direct Consolidation Loan. But, as noted earlier, borrowers may want to avoid combining Parent PLUS and non-Parent PLUS loans in the same consolidation loan. 

Qualifying for the ICR Plan 

Like the REPAYE plan (and unlike IBR and PAYE), the ICR plan requires no partial financial hardship. This means anyone can enroll in the ICR plan as long as they have eligible loans.  

Eligible loans for the ICR plan include:  

Direct Subsidized  Direct Unsubsidized  Direct Grad PLUS  Direct
Consolidation
(Including consolidation loans
taken out after July 1, 2006
that were used to pay off
Parent PLUS Loans

Loans That Cannot Be Repaid Under the ICR Plan 

  • Loans from state or private lenders are not eligible for repayment under the ICR plan. Avoid borrowing private loans if you want to preserve the ability to enroll your loans in the ICR plan 
  • FFEL Loans are not eligible for repayment in the ICR plan. Any FFEL Loans must first be consolidated into a Direct Consolidation Loan before you may enroll in the ICR plan. 
  • Parent PLUS Loans are not eligible for repayment in the ICR plan. However, unlike the IBR plan, Direct Consolidation Loans taken out after July 1, 2006, that repaid Parent PLUS Loans are eligible for repayment in the ICR plan. 
  • Federal Perkins Loans are only eligible to be repaid under the ICR plan when they are first consolidated into a Direct Consolidation loan. Remember to consult with the school from which you obtained your Perkins Loan before consolidating it to find out whether you can benefit from Perkins cancellation. These provisions will be lost if Perkins Loans are consolidated. 
Paying under the ICR Plan 

Your lender or servicer will calculate your monthly payment amount using your discretionary income (including your spouse’s income if you file your taxes jointly), household size, and total outstanding eligible federal loans. 

The ICR plan has special rules for calculating monthly payment amounts. Monthly payment amounts will be the lesser of: 

  1. A monthly payment amount that would result in your federal loans being paid off in twelve years; OR 
  2. A monthly payment amount that is equal to twenty percent of your discretionary income.  

You can estimate your loan payments using the Department of Education’s Loan Simulator 

As noted above, the ICR plan also has a cancellation provision that cancels any principal and interest remaining on your loans if you enrolled in the ICR plan and are still repaying after 25 years (time spent in forbearance or deferment other than an economic hardship deferment does not count).