Income-sensitive repayment is a student loan repayment plan that is offered by some lenders for borrowers who are struggling to make their monthly loan payments. This plan is typically available for Federal Family Education Loans (FFEL), which are loans that were made by private lenders but are guaranteed by the federal government.
Under income-sensitive repayment, borrowers' monthly loan payments are based on a percentage of their gross monthly income. The specific percentage may vary depending on the lender, but it is typically between 4% and 25% of the borrower's income. The payment amount is adjusted annually based on the borrower's income and may increase or decrease depending on the borrower's financial situation.
It's worth noting that income-sensitive repayment is not an income-driven repayment plan, like Income-Based Repayment (IBR) or Pay As You Earn (PAYE), which are offered by the federal government. Instead, it is a repayment option offered by private lenders for FFEL loans.
Borrowers who are interested in income-sensitive repayment should contact their lender to inquire about eligibility and to learn more about the specific terms and conditions of the repayment plan.
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