Income-Based Repayment: How It Works and Whom It’s Best For

Updated on July 20, 2025

The One Big Beautiful Bill, enacted on July 4, 2025, revamped the Income-Based Repayment (IBR) Plan and introduced the Repayment Assistance Plan. Under this new, Amended IBR plan:

The partial financial hardship requirement is eliminated.
Parent PLUS borrowers who consolidate their loans before July 1, 2026, can access IBR without needing to use the double-consolidation loophole.
Loans can be forgiven after 20 years of repayment if your first loan was disbursed on or after July 1, 2014, or after 25 years if your first loan was disbursed before that date.

What Is the IBR Plan?

The Income-Based Repayment plan is one of several income-driven repayment plans offered by the U.S. Department of Education. It’s the second-oldest income-driven repayment option and the only one directly created by Congress. Other plans, such as the Saving on a Valuable Education (SAVE), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR) plans, were established by the Education Department through regulations rather than legislation, making them more susceptible to changes by political administrations.

Student loan borrowers often broadly use the term “income-based repayment” to describe any income-driven repayment (IDR) plan—but it’s specifically one of several IDR options and potentially the most complicated.

Who’s Eligible for the Amended IBR Plan?

Under the Amended IBR plan, eligibility has expanded significantly:

All borrowers with federal Direct Loans are eligible, regardless of income or when loans were borrowed. The prior partial financial hardship requirement no longer applies.
Parent PLUS borrowers can now access IBR directly by consolidating their loans into a Direct Consolidation Loan by June 30, 2026. (Missing this deadline will exclude them from IBR.)
If you’re currently enrolled in Old or New IBR, you’ll be automatically transitioned into Amended IBR sometime before July 1, 2028. You won’t need to take additional steps.

IBR vs Other IDR Plans and RAP

Amended IBR is typically more expensive than the SAVE Plan and, for many borrowers, more expensive than PAYE. It also extends forgiveness timelines for:

Borrowers previously enrolled in SAVE who borrowed only for undergraduate studies.
Borrowers previously enrolled in PAYE or New IBR (10%).

Compared to RAP, Amended IBR can be less expensive depending on your income, family size, and marital tax-filing status (especially for married couples filing jointly). But RAP’s forgiveness takes 30 years, adding 5 to 10 extra years compared to Amended IBR’s 20–25-year forgiveness timeline.

How to Apply for Income-Based Repayment

To enroll in Income-Based Repayment, you must submit an income-driven repayment application. You can apply by uploading the completed IDR request form directly to your student loan servicer, but it’s faster and easier to complete the process online through StudentAid.gov.

Despite an ongoing processing backlog of over 1.6 million applications, most pending applications were submitted months ago. New applications are typically processed within 1 to 2 weeks.

To apply online:

Visit StudentAid.gov/IDR and log in with your Federal Student Aid ID. You’ll need to create an FSA ID if you don’t already have one.
Select “Apply for an Income-Driven Repayment Plan.” You’ll review your contact information, federal student loan information, and the terms and conditions.
Choose your repayment plan. For now, you can still choose PAYE, ICR, or IBR, depending on which plans you’re eligible for. Choose IBR if you’re ready to switch to that plan.
Complete the application. The online form will allow you to access your most recently filed tax return from the IRS. You can also upload a pay stub or letter documenting your income using the online form.

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