IBR vs ICR: Which Repayment Plan Saves You the Most Money?

Choosing between Income-Based Repayment, called IBR, and Income-Contingent Repayment, known as ICR, just got more complicated.

The Saving on a Valuable Education (SAVE) Plan — once the government’s newest repayment option — was permanently struck down by the 8th Circuit on March 10, 2026, leaving many borrowers in forbearance and scrambling to find a plan that keeps them moving toward loan forgiveness.

Here’s the deal: with SAVE gone, IBR and ICR are two of the income-driven options still on the table. But which one’s right for you?

This guide cuts through the confusion. We’ll compare IBR and ICR side by side and give you a framework figure out your best fit.

Quick Answer: Most borrowers should stick with IBR. ICR is worth a look in two narrower cases: a Parent PLUS loan already sitting in a Direct Consolidation completed on or before June 30, 2026, or a small loan balance paired with a middle income. ICR is not the high earner’s plan — its advantage narrows as income rises, and at higher incomes IBR was cheaper at every balance we tested.

Related Reading:

• Income-Based Repayment Chart

• Income Contingent Repayment

• Income-Based Repayment Income Limit

How IBR and ICR are Different

Here’s how the two plans stack up, feature by feature:

• Who can qualify — Neither plan uses a hardship test any more. IBR’s partial-financial-hardship requirement was removed, so eligibility now turns on your loan types and when you borrowed; ICR never had one. IBR still caps the payment at the 10-year Standard amount — that is a payment rule now, not an entrance test.

• Eligible loan types — IBR covers Direct loans, and FFEL loans through the FFEL-side version of the plan. ICR is Direct-only. Neither plan takes a Parent PLUS loan directly; reaching one required a Direct Consolidation completed on or before June 30, 2026, and that window has closed.

• Monthly payment — IBR is 10% of discretionary income if you borrowed on or after July 1, 2014 and 15% if you borrowed before it, never more than the 10-year Standard payment. ICR is the lesser of 20% of discretionary income or a 12-year fixed payment multiplied by a published income factor. Discretionary income is not take-home pay — it is your AGI minus a poverty-guideline deduction, and that deduction is 150% of the guideline for IBR but only 100% for ICR.

• Forgiveness timeline — IBR forgives after 20 years if you borrowed on or after July 1, 2014 and 25 years if you borrowed before it; ICR forgives after 25 years.

• Interest relief — IBR waives unpaid interest on subsidized loans for the first three years; ICR offers no interest relief, so you pay all accrued interest.

• Best for — IBR fits most borrowers, and it is the cheaper plan as income climbs because the 10-year Standard cap holds the payment down. ICR fits a borrower whose Parent PLUS consolidation predates July 1, 2026, or one with a small balance and a middle income.

• Biggest drawback — IBR may leave a larger forgiven balance, which could mean a bigger tax bill later. ICR’s drawback is cost: the smaller poverty deduction and the higher rate usually make it the more expensive plan.

ICR costs more because it requires borrowers to pay a higher percentage of their income and does not cap payments at the 10-year standard repayment amount like IBR does. This means:

• Higher payment rate: ICR charges 20% of your discretionary income, against 10% for IBR if you borrowed on or after July 1, 2014 and 15% if you borrowed before it. ICR also counts more of your income: it subtracts only 100% of the poverty guideline where IBR subtracts 150%.

• No 10-year Standard cap: IBR never charges more than the 10-year Standard payment. ICR has no such cap — but it is not unlimited either. ICR charges the lesser of the 20% figure or a 12-year fixed payment multiplied by a published income factor, and that factor tops out at 200%, so an ICR payment cannot exceed twice the 12-year amount on your balance no matter how high your income goes.

Run your own figures on the ICR calculator — it shows both ICR formulas and which one sets your payment. For example, let’s compare two borrowers:

• Loan Balance: $100,000

• Income: $150,000/year

• Family Size: 2

• Filing status: married filing jointly

Here’s how their monthly payments compare:

• IBR — about $980 a month: 10% of discretionary income, which for this borrower stays below the 10-year Standard cap.

• ICR — about $1,277 a month: 20% of discretionary income would be $2,139, but the 12-year formula produces less, and ICR charges the lesser of the two.

Figures assume a 6% interest rate. ICR still costs this borrower roughly $300 a month more than IBR — but the gap comes from the smaller poverty deduction and the higher rate, not from any absence of a ceiling.

Who Can Apply?

• IBR: There is no longer an income test to get in. IBR used to require a partial financial hardship — your calculated payment had to beat the 10-year Standard payment — but that entrance test was repealed. The 10-year Standard figure still matters, just as a ceiling on what you pay rather than a gate on who gets in.

• ICR: No income restrictions either, and ICR never had a hardship test. The catch is on the loan side: ICR only takes Direct loans.

Which Loans Work?

• IBR: Works for most federal loans. Parent PLUS borrowers can’t enroll directly; they could reach IBR only by consolidating into a Direct Consolidation Loan and moving to ICR (then IBR), and only if that consolidation was completed on or before June 30, 2026. That window has now closed, so a Parent PLUS borrower who didn’t consolidate in time has no income-driven option and uses the Tiered Standard plan. The old “double consolidation” workaround is gone, and a new Parent PLUS loan taken out on or after July 1, 2026 has no income-driven option at all.

• ICR: Direct loans only — an FFEL loan can never sit on ICR. A consolidated Parent PLUS loan can, but only if that Direct Consolidation was completed on or before June 30, 2026. Consolidating now does not open that door: a new Direct Consolidation is itself a Direct loan made after the cutoff, which is exactly what closes it.

What Will You Pay?

• IBR: 10% of discretionary income if you borrowed on or after July 1, 2014, 15% if you borrowed before it, and never more than the 10-year Standard payment.

• ICR: The lesser of 20% of discretionary income or a 12-year fixed payment multiplied by a published income factor. There is no 10-year Standard cap, but the payment is not unlimited either — whichever formula produces less is what you owe. ICR runs higher than IBR mainly because it deducts only 100% of the poverty guideline where IBR deducts 150%.

What About Interest?

• IBR: If your payment doesn’t cover all the interest on subsidized loans, the government waives the unpaid portion for the first three years.

• ICR: No waivers—you’re responsible for all accrued interest.

Which Is Better for Forgiveness: IBR or ICR?

When it comes to forgiveness, IBR and ICR both offer similar timelines for borrowers who aren’t eligible for New IBR: 25 years of repayment before any remaining balance is forgiven.

But the difference lies in what happens during those 25 years, which can significantly impact how much you’ll owe in taxes when your loans are forgiven:

• IBR Gets You More Forgiveness: Because IBR typically results in lower monthly payments (10-15% of discretionary income, capped), you’ll likely pay less over the life of the loan. That leaves a larger balance to be forgiven after 25 years.

• ICR Reduces Your Potential Tax Hit: ICR usually costs more each month, so you’ll likely pay more over those 25 years. The upside is a smaller forgiven balance — and potentially a lower tax bill when the forgiven amount is treated as taxable income.

Take the same borrower as above — a $100,000 balance at 6%, $150,000 of income, family size 2, married filing jointly — and compare the two 25-year plans:

• Old IBR — $1,110 a month: 15% of discretionary income would be $1,469, but the 10-year Standard cap holds the payment at $1,110.

• ICR — $1,277 a month: 20% of discretionary income would be $2,139; the 12-year formula produces less, so that is what ICR charges.

That is roughly $167 a month more on ICR, or about $2,000 a year.

• Lower payment: IBR, by about $167 a month for this borrower — and the gap widens as income rises, because the ICR income factor climbs with it.

• Larger forgiven balance: also IBR. Paying less over 25 years leaves more to forgive, which can mean a bigger tax bill when it lands.

We have not put a 25-year total on either plan here. Both payments are recalculated every year against your income and family size, so any lifetime figure is only as good as its guess about the next two and a half decades of your earnings.

Which Plan Saves You More? For most borrowers, IBR — lower monthly payments now, and the 10-year Standard cap keeps it lower as you earn more. ICR earns its place in a narrower set of cases: a Parent PLUS consolidation that beat the June 30, 2026 cutoff, or a small balance and a middle income.

Feeling overwhelmed? Run your numbers on the IBR calculator or the ICR calculator to see your own monthly payment and forgiveness timeline.

Here’s how to make change to IBR or ICR:

1. Review Your Eligibility: Check whether you meet the requirements for your desired plan. IBR no longer requires a partial financial hardship — that entrance test was repealed, so what matters now is your loan types and when you borrowed. ICR has never had a hardship requirement, but it accepts Direct loans only.

2. Log Into Your Loan Account: Visit StudentAid.gov to access your account. This is where you’ll find detailed information about your student loan balance, interest rates, and current repayment plan.

3. Submit an Application: Use the Department of Education’s IDR Plan Request form. You’ll need to provide information about your income, often using your most recent tax return or an alternative proof of adjusted gross income.

4. Work with Your Loan Servicer: Your loan servicer will process your application, update your payment plan, and let you know your new monthly payment amount. They’ll also explain how switching plans might affect your repayment period or eligibility for student loan forgiveness.

5. Stay Updated: After switching, monitor your payments and check how the new plan impacts your student loan debt. Keep an eye on updates from the Department of Education, as repayment terms can change.

Related: Who to Talk to For Student Loan Repayment Help

The SAVE Plan—once one of the most affordable repayment options—is over. The 8th Circuit permanently struck it down on March 10, 2026, and it isn’t coming back. There are no new enrollments, and you can’t recertify into it.

• You’re likely in administrative forbearance: No payment is due, but time in forbearance generally doesn’t earn credit toward PSLF or IDR forgiveness. If you’re pursuing PSLF, a buyback may recover some of those months.

• You’ll need a current plan: For most borrowers, IBR is the safe default—it’s set by Congress and the most stable option. ICR is still available, and the new Repayment Assistance Plan (RAP) opened July 1, 2026.

• Watch for your servicer’s notice: Starting July 1, 2026, you’ll get about 90 days to choose a plan. If you don’t choose, you’re usually moved to a standard plan with a higher payment.

With SAVE permanently struck down, picking the right income-driven repayment plan often comes down to IBR vs. ICR. For most borrowers, IBR is the better choice—if you’re eligible and can afford it.

But ICR might make sense if:

• Your Parent PLUS loans are already in a Direct Consolidation completed on or before June 30, 2026.

• You have a small loan balance and a middle income — the window where ICR’s 12-year formula can undercut IBR. That window closes as your income rises, so run both before you switch.

These plans are only worth it if you need a lower monthly payment, you’re working toward loan forgiveness, or both. If your goal is to pay off your loans faster, these aren’t long-term solutions.

Need help sorting it out? Book a call, and we’ll help you figure out the best repayment plan for your situation.