Income-Driven Repayment Plans (IDR) are a set of federal student loan repayment plans that adjust the borrower's monthly payments based on their income and family size. These plans are designed to help borrowers who may be struggling with high monthly payments on their federal student loans.
There are four main types of IDR plans: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR).
Under these plans, borrowers' monthly payments are typically capped at a percentage of their discretionary income, which is determined by subtracting 150% of the poverty guideline for their family size from their adjusted gross income. Depending on the plan, the percentage can range from 10% to 20% of discretionary income.
Additionally, these plans also offer loan forgiveness after a certain period of time, usually 20 to 25 years of payments, depending on the plan.
It's important to note that IDR plans are only available for federal student loans, and private student loans are not eligible. Borrowers must also meet certain eligibility requirements to enroll in an IDR plan, such as having a partial financial hardship or having loans that are in good standing.
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