The US Department of Education has resumed accepting applications for income-driven repayment (IDR) plans from March 26, 2025, following a suspension in February. Worthy consideration for individuals with considerable loan balances or constrained income, IDR might not be an optimal choice for those on the verge of clearing their federal student loans or those who can comfortably handle the standard repayment scheme.
The Saving for a Valuable Education (SAVE) plan, although mentioned on the FSA website as a repayment option, is in fact non-viable. A US appeals court has obstructed this plan and there's low likelihood of its reinstatement under the existing administration.
Despite the demise of the SAVE plan, eight million borrowers who were part of this scheme will have their loans shifted to a no-interest forbearance since July 2024, until further notice from the Department of Education. Those wary of upcoming changes to these plans may find comfort in the Income-Based Repayment (IBR) plan, established and controlled by Congress.
There have been suggestions by Congress to replace the existing IDR plans with a scheme called the Repayment Assistance Plan. This new plan would offer loan forgiveness only after thirty years of qualifying monthly payments, with the amounts based on the borrower's aggregate adjusted gross income.
For loans dispersed prior to July 1, 2026, current repayment options are sustained, except for the Income Contingent Repayment (ICR) plan which will be ceased. ICR plan members will transition into a revised IBR scheme.
The revised IBR plan will admit higher payments, pegged at 15% of the borrower's discretionary income, for loans disbursed after July 1, 2014. The standard repayment ceiling and partial financial hardship criterion will both disappear. Repayment period will now depend on whether the borrower is an undergraduate or graduate student.
The decision to apply for an IDR plan should align with your personal financial state and objectives. Low-income or unemployed borrowers could gains from reduced monthly payments. Conversely, for those with comfortable earnings who can afford standard repayment schedules, IDR plans may not be as financially advantageous due to the likelihood of higher interest fees induced by higher discretionary income and an extended repayment period.
The choice to apply for an IDR plan should be weighed with expectations of alterations in repayment plans. For instance, those borrowing student loans on or after July 1, 2026, may have a single IDR option. Remember also that recertification deadlines have been extended to February 2026 for those unable to submit their recertification details during the suspension of IDR applications.
Given the baffling vista of student loan repayment, regular monitoring of your loans and careful record of payments proves important. Don’t hesitate to seek clarification about IDR plans from your loan servicer or to approach your school's financial aid office for advice on repayment options.