Income-Driven Repayment (IDR)
EducationGlossary term
Definition
A set of federal student loan repayment plans that cap your monthly payment at a percentage of your discretionary income, typically between 10% and 20%. IDR plans extend the repayment period to 20 or 25 years, after which any remaining balance is forgiven. These plans are designed to make loan payments more manageable for borrowers whose debt is high relative to their income.
Related terms
- Federal Student LoanA loan funded by the federal government to help students pay for college or career school, offering fixed interest rates and flexible repayment options that are generally more favorable than private loans. Federal student loans include Direct Subsidized, Direct Unsubsidized, and Direct PLUS loans, each with different eligibility requirements and terms. Borrowers may also qualify for income-driven repayment plans and loan forgiveness programs.
- Public Service Loan Forgiveness (PSLF)A federal program that forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments while working full-time for an eligible public service employer. Qualifying employers include government agencies, nonprofit organizations, and certain other public service entities. Borrowers must be on an income-driven repayment plan or the standard 10-year plan for their payments to count toward PSLF.
- Student Loan ConsolidationThe process of combining multiple federal student loans into a single Direct Consolidation Loan with one monthly payment and a fixed interest rate based on the weighted average of your existing loans. Consolidation can simplify repayment and make you eligible for certain repayment plans or forgiveness programs you might not otherwise qualify for. Unlike refinancing, federal consolidation does not lower your interest rate but does preserve access to federal loan benefits.
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