Income-Contingent Repayment Plan

The income-contingent repayment plan is one of the options that you can choose from when you have federal student loans. Here are the basics of the income-contingent repayment plan and how it works. 

Income-Contingent Repayment Plan

With this type of student loan repayment plan, your monthly payment will depend on your income. The lender will look at the size of your family, the amount of money that you borrowed, and how much money you make in order to determine your payment. Ideally, the payment is going to be affordable when you have a lower income and will increase, as your income increases.

How Payments Are Calculated

There are two different ways to calculate payments. A lender will usually choose the payment plan that results in the lower payment. The first way to calculate your monthly payment is to take 20 percent of your monthly discretionary income. The 20 percent is used as your payment amount. With the other option, a lender will look at what your payment would be with the standard repayment plan, over a 12 year period.Then, they multiply this amount by an income percentage factor to determine your monthly payment.


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