Income-Contingent Repayment Plan (ICR)
What Is Income-Contingent Repayment Plan (ICR)?
Income-Contingent Repayment Plan (ICR) is a federal student loan repayment option that calculates payments based on income, family size, and total loan balance.
ICR was the first income-driven repayment plan introduced in federal student lending.
It is available to Direct Loan borrowers.
Why It Matters
Income-Contingent Repayment Plan:
- Adjusts payments based on income
- Caps payments at 20% of discretionary income
- Offers forgiveness after 25 years
ICR may be useful for certain borrowers, including those with Parent PLUS Loans that have been consolidated.
How Income-Contingent Repayment Plan (ICR) Works
Income-Contingent Repayment calculates payments as the lesser of a fixed percentage of discretionary income or a payment based on a 12-year repayment schedule adjusted for income.
Example: A borrower earning $45,000 may see lower monthly payments than under standard repayment, depending on discretionary income calculations.
Remaining balances may qualify for forgiveness after 25 years of qualifying payments.
ICR vs. IBR
ICR → 20% discretionary income formula
IBR → 10% or 15% formula
Payment structures differ.
FAQs About ICR
Can Parent PLUS borrowers use ICR?
Yes, if loans are consolidated into a Direct Consolidation Loan.
Does ICR require income recertification?
Borrowers must update income annually.
Is forgiveness taxable?
Tax treatment depends on current federal rules.
Related Terms
