Partial Financial Hardship for IBR: What It Means

Updated on January 29, 2025

Quick Facts

  • If your payment on the 10-Year Standard Plan is higher than your IBR payment, you qualify for IBR partial financial hardship.

  • You only need to prove PFH when you first apply for IBR. Once you’re in, you stay on the plan, even if your income goes up.

  • If you don’t qualify for PFH now, timing your application or using pay stubs instead of tax returns could help you get approved.

Overview

Figuring out if you qualify for IBR partial financial hardship feels like just one more impossible hoop to jump through in a system that’s already overwhelming. For many borrowers, Income-Based Repayment is the only plan that makes sense—PAYE isn’t an option, ICR is way too expensive, and the SAVE plan is tied up in ongoing litigation.

You didn’t ask to be forced into a plan that doesn’t work for you, but here you are, trying to avoid getting stuck with unaffordable payments. And now you’re left wondering if you even qualify for IBR because of this confusing Partial Financial Hardship rule.

Here’s what this guide will cover:

  • What “partial financial hardship” actually means.

  • How to tell if you qualify for IBR.

  • What you can do if the system feels stacked against you.

This is your starting point to make sense of it all and take control of your repayment plan.

What Is a Partial Financial Hardship?

A Partial Financial Hardship means your monthly payment on the 10-Year Standard Repayment Plan is higher than what you’d pay on an Income-Based Repayment (IBR) plan. That’s it.

Under IBR, your payment is capped at 15% of your discretionary income. Discretionary income is just what’s left after subtracting 150% of the federal poverty guideline (based on your family size and where you live) from your adjusted gross income.

Let’s say you’re single and live in a state where the poverty guideline for a family of 1 is $14,580. Here’s how it works:

Example 1: If your AGI is $60,000:

  • Subtract 150% of the poverty guideline ($21,870) from your income: $60,000 – $21,870 = $38,130 discretionary income.

  • 15% of $38,130 = $477.38 per month on IBR.

  • Compare that to the 10-Year Standard Repayment Plan payment on a $50,000 loan, which is $555 per month.

  • Result: Since $555 is more than $477.38, you qualify for PFH.

Example 2: If your AGI is $100,000:

  • Subtract the same $21,870: $100,000 – $21,870 = $78,130 discretionary income.

  • 15% of $78,130 = $976.63 per month on IBR.

  • Compare it to the same $555 payment on the 10-Year Standard Plan.

  • Result: This time, $555 is less than $976.63, so you wouldn’t qualify for PFH.

Related: How to Lower AGI for Student Loans?

PFH is just a way to determine if IBR can lower your monthly payment. If your payment on the 10-Year Plan is higher than your IBR payment, you qualify.

Not sure where to start? Use our PFH calculator to check if you qualify and our IBR calculator to estimate your monthly payments.

How Do You Prove It?

When you apply for IBR, you prove Partial Financial Hardship by documenting your income. You can do this using either your most recent tax return or your pay stubs.

If your income looks higher on paper—due to bonuses or commissions—your pay stubs may better reflect your day-to-day earnings and help you qualify.

Timing matters too.

If you’re between jobs or your income is temporarily lower, applying during that period can make it easier to meet the PFH requirement.

Do I Qualify for IBR?

Do I Qualify for IBR if I Don’t Have a Partial Financial Hardship?

The short answer? Not right now. But there are ways to work around it if you’re trying to get into IBR. The key is how you document your income when you apply.

  • Document your income carefully. When you apply for IBR, you can use either your tax return or your pay stubs. If you’re a high earner whose annual income looks high because of bonuses or extra payouts, try using pay stubs instead of last year’s tax return. Your regular paychecks might reflect a lower day-to-day income, which could help you qualify.

  • Time your application strategically. If you’re about to switch jobs or take a short break from work, consider applying during that time. Even if your income jumps back up later, you can still get into IBR because the rules say once you’re in, you stay in. You don’t need to meet the Partial Financial Hardship rule every year to remain on the plan.

These strategies can help you get through the door and lock in IBR before your circumstances change.

Do You Need PFH?

Do You Always Need a Partial Financial Hardship?

No, you don’t always need a Partial Financial Hardship to stay on IBR. You only need to meet the PFH requirement when you first apply. Once you’re in, you can stay on the plan—even if your income goes up or you no longer qualify for reduced payments under the PFH rules.

For example, if you applied for IBR while your income was temporarily lower—maybe during a job switch—you’d still be allowed to stay on IBR even after your income increases. Your payments might go up when you recertify, but you won’t be kicked off the plan. Once you’re in, you’re in.

What Happens If I Don’t Qualify for a Partial Financial Hardship?

If you don’t qualify for a Partial Financial Hardship, you won’t be able to switch into IBR right now.

But that doesn’t mean you’re out of options. There are other repayment plans that might work better for your situation:

  • Extended Repayment Plan: This plan spreads your payments over up to 25 years, which can significantly lower your monthly payment amount. It’s not tied to your income, so there’s no Partial Financial Hardship requirement, and it’s a good option if your loan balance is high.

  • Graduated Repayment Plan: With this plan, your payments start low and increase every two years. It can work well if your income is expected to grow over time.

  • Income-Contingent Repayment: This is an income-driven repayment plan that calculates your payment at 20% of your discretionary income or the amount you’d pay on a 12-year fixed plan, whichever is lower. It’s less favorable than IBR or SAVE for most borrowers, but it could still be more affordable than the Standard payment.

Related: Which Student Loan Repayment Plan is Best?

Just as a reminder, if you know your income is about to change or you’re between jobs, you can document your income during that period to meet the PFH requirement and get into IBR. Once you’re in, you don’t need to meet the PFH rule again to stay on the plan.

For more details on these repayment options and strategies for higher incomes, check out our full guide on IBR for higher incomes.

Does the SAVE Plan Litigation Affect the Partial Financial Hardship Requirement?

No, it doesn’t. There’s no special waiver or workaround for the Partial Financial Hardship requirement just because the SAVE plan is in jeopardy. You might wish the Department of Education worked like that—or that the government would step in to fix this—but they’re not.

Instead, they’re just reverting back to the old rules Congress passed when they created the IBR Plan over a decade ago.

Unfortunately, those rules don’t account for the historic mess borrowers are dealing with now. It’s frustrating, but the PFH requirement is here to stay for IBR, no matter what happens with SAVE.

Related: Why is the SAVE Plan Blocked?

How Does Partial Financial Hardship Affect PSLF?

Partial Financial Hardship and Public Service Loan Forgiveness aren’t directly related, but here’s where it gets tricky: to get PSLF credit, you need to make 120 qualifying payments on an eligible repayment plan that qualifies for PSLF.

That includes IDR plans like IBR, which requires you to meet the PFH rule when you apply.

Related: What Type of Repayment Plan Must You Be In to Qualify for PSLF?

If SAVE goes away and you don’t qualify for PFH, you might be forced into ICR to keep earning PSLF credit. ICR is an eligible plan, but it often comes with higher monthly payments.

The good news is that you can still switch to IBR later if your income changes and you qualify for PFH at that time. It’s all about timing your application to fit your financial situation.

Do My Loans Qualify for IBR?

Before we wrap up, let’s make sure you’re clear on one more important piece of the puzzle: loan eligibility. It’s not enough to figure out whether you meet the PFH requirement—you also need to make sure your loans qualify for IBR in the first place. Here’s what you need to know:

  • Direct Loans: Most federal student loans issued after 2010, including Direct Subsidized Loans and Direct Unsubsidized Loans, are eligible for IBR. This also includes Direct PLUS Loans taken out by graduate students (but not by parents).

  • FFEL Loans: Loans from the Federal Family Education Loan (FFEL) program are eligible for IBR, whether they’re consolidated or not. But borrowers with these older loans often struggle with the Partial Financial Hardship requirement because of lower balances or higher incomes.

  • Perkins Loans: These loans aren’t eligible for IBR unless they’re consolidated into a Direct Consolidation Loan. Borrowers with Perkins Loans should review whether consolidation is the right step for them.

  • Parent PLUS Loans: Unfortunately, Parent PLUS Loans are not eligible for IBR—even if consolidated )unless you use the double consolidation loophole). But they may qualify for Income-Contingent Repayment, which can still count toward PSLF if that’s your goal.

How Does Loan Eligibility Affect PFH?

If you’re carrying older loans, like FFEL or Perkins Loans, and want to qualify for IBR, understanding your loan type is critical. Even if your loans are eligible, you still need to meet the eligibility requirements for PFH. Timing and documentation can be key, especially if you’re dealing with factors like fluctuating income.

To confirm your loan types and explore repayment options, visit studentaid.gov or contact your loan servicer for personalized guidance.

Bottom Line

Still feeling overwhelmed by the IBR partial financial hardship rules? You’re not alone.

This article broke down what PFH means, how to calculate your payments, and what you can do to qualify for IBR. Whether it’s proving your income, timing your application, or exploring alternative repayment options, figuring it all out can feel like a full-time job.

Here’s the good news: our student loan expert can walk you through your options!

Book a call with us today. We’ll:

  • Help you calculate if you meet the PFH requirement.

  • Walk you through how to document your income strategically.

  • Explore other repayment plans if IBR isn’t the best fit for you.

Don’t let confusing rules keep you stuck with payments you can’t afford. Get clear answers and a personalized action plan in just one call.

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