What is the difference between income contingent and income based repayment?

IBR typically lowers your monthly payment more than ICR does. It limits payments to either 10% or 15% of your discretionary income, depending on the type of loan, whereas ICR caps payments at 20%.

How is ICR payment calculated?

When borrowers enter ICR, their monthly payment is calculated based on their adjusted gross income and the amount they’d otherwise pay over a 12 year repayment plan. 20% of your discretionary income, or. the amount you’d pay under a standard 12-year repayment plan, multiplied by an income percentage factor.

What is the income contingent repayment ICR plan?

The Income-Contingent Repayment (ICR) Plan is a repayment plan with monthly payments that are the lesser of (1) what you would pay on a repayment plan with a fixed monthly payment over 12 years, adjusted based on your income or (2) 20% of your discretionary income, divided by 12.

What is my AGI?

The IRS defines AGI as “gross income minus adjustments to income.” Depending on the adjustments you’re allowed, your AGI will be equal to or less than the total amount of income or earnings you made for the tax year.

Is IBR or Repaye better?

IBR – Which should you choose? In some respects, Pay As You Earn Plan comes out as the clear winner against IBR. It lowers your monthly payments to just 10% of your discretionary income and offers loan forgiveness after 20 years, no matter when you borrowed your loans.

Are Parent PLUS loans eligible for income contingent repayment?

The federal government offers four types of income-driven repayment plans, but parent PLUS loans are only eligible for one: Income-Contingent Repayment (ICR). One advantage of ICR is that you’ll be eligible for parent PLUS loan forgiveness after you make payments for 25 years.

Who is eligible for income contingent repayment?

Choose the right income-driven plan for you Aren’t married; don’t have graduate loans; have high earning potential. Are married with two incomes; have graduate loans; have low earning potential. Don’t qualify for PAYE; have FFELP student loans. Have parent PLUS loans; want to reduce payments slightly.

What do ICR mean?

ICR

Is IBR based on AGI or taxable income?

IBR payments are supposed to be based on your “Adjusted Gross Income” or AGI (a figure from your federal tax return) whenever possible.