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 Plan, known as SAVE, — the government’s newest repayment option — was recently blocked by a court, forcing many borrowers into forbearance limbo or scrambling to find a repayment plan that keeps them moving toward loan forgiveness for their federal student loans.

Here’s the deal: ICR is temporarily back on the table, and IBR is still an option. 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. But if you have Parent PLUS loans, or you’re a high earner with a small loan balance and a tiny family, ICR might be your better bet.

Related Reading:

• Income-Based Repayment Chart

• Income Contingent Repayment

• Income-Based Repayment Income Limit

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 Percentage: ICR takes 20% of your discretionary income, while IBR only requires 15%

• No Payment Cap: ICR payments can grow indefinitely as your income rises, while IBR caps payments to what you’d pay on a 10-year plan, protecting you from excessive monthly costs.

For example, let’s compare two borrowers:

• Loan Balance: $100,000

• Income: $150,000/year

• Family Size: 2

Who Can Apply?

• IBR: Not everyone can qualify. To get in, your calculated IBR payment must be lower than what you’d pay on the standard 10-year plan. If you earn too much compared to your loan balance, you’re not eligible.

• ICR: No income restrictions. If you have eligible federal loans, you can sign up.

Which Loans Work?

• IBR: Works for most federal loans, but Parent PLUS borrowers need a special process called “double consolidation” to qualify.

• ICR: Works for all eligible federal loans, including Parent PLUS, without extra steps.

What Will You Pay?

• IBR: Payments are 10-15% of your take-home pay and are capped so they won’t exceed the standard 10-year repayment amount.

• ICR: Payments are 20% of your take-home pay, with no cap. For higher earners, this can mean paying nearly double.

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: Under ICR, payments are 20% of discretionary income with no cap, meaning you’ll likely pay more over time. While this might feel like a disadvantage, the upside is a smaller forgiven balance—and potentially a lower tax bill when the forgiven amount is treated as taxable income.

• Savings with IBR: $437.50 less per month, $131,250 saved in total payments.

• Forgiveness with IBR: Larger forgiven balance ($68,750), but potentially a higher tax bill due to the larger forgiven amount.

Which Plan Saves You More? For most borrowers, IBR saves more upfront with lower monthly payments. But if you expect a significant jump in income or are concerned about a tax bill on forgiven debt, ICR could make more sense.

Feeling overwhelmed? Use our IBR vs. ICR Calculator to see your personalized monthly payment and forgiveness timeline in just a few clicks.

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

1. Review Your Eligibility: Check whether you meet the requirements for your desired plan. To qualify for the IBR Plan, your calculated payment must be less than what you’opd pay under the 10-year standard repayment plan. This is referred to as a partial financial hardship. The ICR Plan has no hardship requirement, making it available to more borrowers.

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—widely considered one of the most affordable repayment options for many borrowers—was temporarily blocked due to legal challenges. While its future is uncertain, here’s what you should know:

• Why SAVE Was Blocked: Legal questions about the plan’s funding and implementation paused its rollout. Until resolved, borrowers must choose from existing plans like IBR or ICR.

• What Made SAVE Popular: SAVE offered lower payments (5-10% of discretionary income), protection against unpaid interest growing your balance, and shorter forgiveness timelines for some borrowers.

• What You Can Do Now: Apply for IBR or ICR to stay on track with repayment or forgiveness. If SAVE becomes available again, borrowers will likely have the option to switch.

With the SAVE plan blocked and the Trump administration stepping in, picking the right income-driven repayment plan will likely come 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:

• You have Parent PLUS loans.

• You’re a high earner with a small loan balance and a tiny family.

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.