IBR in 2025: How It Works, Who Qualifies, and What Happens Next

When people say they’re “in IDR,” what they really mean is that they’re in one of several plans that base payments on income and family size. Income-Based Repayment (IBR) is one of those plans—and in 2025, it’s the only one still forgiving loans.

Income-Based Repayment (IBR) is a federal repayment plan that sets your monthly payment based on your income and family size, not your loan balance. Most borrowers pay 10–15% of their discretionary income, and any remaining balance is forgiven after 20 or 25 years of qualifying payments. To stay on the plan, you must re-certify your income and family size each year.

In 2025, IBR sits at the center of federal student loan relief because it’s the only income-driven plan still processing forgiveness. Here’s how the landscape looks:

• SAVE: Exists but remains frozen. Borrowers currently in SAVE are in administrative forbearance and aren’t earning IDR credit toward IBR forgiveness. You can switch from SAVE to PAYE, ICR, or IBR—but not back to SAVE. Time in SAVE may still count for PSLF if you meet employment rules.

• PAYE and ICR: Still accrue credit toward IDR and PSLF for now, but both plans are being phased out under the One Big Beautiful Bill Act.

• IBR: The main plan processing discharges—alongside PAYE and ICR—under the court-supervised AFT agreement. All three plans remain active until the new Repayment Assistance Plan (RAP) launches in 2026.

Related: IBR vs RAP

Most federal student loans qualify for IBR. That includes Direct Loans, FFEL loans, and consolidated Parent PLUS or Perkins loans.

Under the One Big Beautiful Bill Act, you no longer need to prove a partial financial hardship to enter IBR. This change opens IBR to borrowers who were previously locked out due to income—especially those with higher earnings or smaller balances who couldn’t qualify before.

Your monthly payment is based on three things: your income, family size, and when you first borrowed.

• If you borrowed before July 1, 2014: You’ll pay 15% of your discretionary income for up to 25 years.

• If you borrowed on or after July 1, 2014: You’ll pay 10% of your discretionary income for up to 20 years.

Discretionary income means the amount you earn above 150% of the federal poverty guideline for your household size.

No matter which version of IBR you’re in, your payment is capped at what you’d owe on the standard 10-year plan, even if your income rises.

Married borrowers can lower payments by filing taxes separately, since that limits the calculation to their own income. And if your payment feels too high—especially if you’ve had a change in income or family size—you may be able to recalculate your payment early rather than waiting for your annual renewal.

Related: How to Exclude Your Spouse’s Income From IBR

IBR loan forgiveness kicks in after 20 or 25 years of qualifying payments—240 or 300 months, depending on when you first borrowed. Those months don’t need to be consecutive, but they do need to be credited as time you were in repayment.

In 2025, the Education Department finished its one-time IDR account adjustment, a data cleanup meant to credit past repayment, certain deferments, and long forbearances toward those totals. That review pushed many long-term borrowers over the finish line—but it also exposed problems: missing records, “null” payment counts, and inconsistencies between plans.

If your account shows missing or incorrect data, you can verify and request a correction. The process often involves checking your qualifying payment count, documenting gaps, and asking the Department to reconcile your records.

Related: How to Fix Your IBR Payment Count

Federal student loan forgiveness under IBR is tax-free through December 31, 2025, thanks to the American Rescue Plan Act. After that, forgiven balances may once again count as taxable income unless Congress extends the exclusion.

Related: Will I Owe Taxes on IBR Loan Forgiveness in 2026?

If your discharge posts in 2026 or later, you could face a federal—and possibly state—tax bill on the forgiven amount. Borrowers who are insolvent when forgiveness happens can often reduce or eliminate that liability by filing IRS Form 982, but documentation matters.

Related: How Insolvency Works for Student Loan Forgiveness

If you’re not yet eligible for forgiveness, the next few years are about choosing the right plan for the long haul.

PAYE and ICR are still open for now and can keep earning forgiveness credit, but both will close by summer 2028. SAVE remains on hold—borrowers who are still enrolled are in administrative forbearance and are not gaining IBR credit unless they also qualify for PSLF.

Starting in 2026, the Repayment Assistance Plan (RAP) will replace these options for new borrowers. RAP adds up to five extra years before forgiveness but includes more substantial interest relief, making it a middle ground between affordability and time.

Related:

• What Happens to IBR and SAVE Borrowers When RAP Starts

• Should You Switch from SAVE or PAYE to IBR for Forgiveness?

• IBR vs ICR

Life After IBR

Once your loans are forgiven—or your balance finally feels manageable—your focus shifts from repayment to rebuilding. IBR forgiveness wipes the debt from your credit report, but it doesn’t instantly boost your score. What helps most is showing a stable payment history and maintaining a low overall debt-to-income ratio.

If you plan to buy a home, lenders typically include your IBR payment in your mortgage underwriting, even if it’s well below the standard amount. That lower payment can improve your qualifying ratios and open more options.