Income-Based Repayment is a federal repayment plan that caps payments at 10% or 15% of discretionary income (depending on when you borrowed) and forgives the remaining balance after 20 or 25 years.
What it means in plain English
Income-Based Repayment is the oldest of the income-driven plans, created by the College Cost Reduction and Access Act of 2007. It comes in two flavors: New IBR for borrowers who took out their first loan on or after July 1, 2014, and Old IBR for everyone else.
New IBR caps payments at 10% of discretionary income with a 20-year forgiveness window. Old IBR caps payments at 15% with a 25-year forgiveness window. Both use 150% of the federal poverty line as the protected income floor.
Like PAYE, IBR carries a guarantee that your payment will never exceed the 10-year standard amount, no matter how much your income grows.
Why it matters for NP students
IBR is often the only IDR plan available to borrowers with older Direct or FFEL loans. For NPs who completed an undergraduate degree before 2014 and consolidated rather than refinanced, IBR may be the entry point into income-driven repayment.
IBR also has an additional eligibility test: your standard 10-year payment must be higher than your IBR payment to enroll. This is called the 'partial financial hardship' test and is automatic in most NP-debt scenarios where the loan exceeds about $80,000.
All IBR payments count toward PSLF, making it a viable backup if you have legacy loans or get pushed off SAVE for any administrative reason.
How it actually works
The math behind Income-Based Repayment is more concrete than most borrowers realize. Here's a worked example using current 2026 numbers.
Common pitfalls
- Old IBR (15% for pre-2014 borrowers) is rarely the cheapest option, check SAVE and PAYE before defaulting to IBR.
- Missing recertification, IBR resets to the standard 10-year payment instantly.
- Not capturing the partial financial hardship documentation when you first enroll, which can stall processing for weeks.
- Forgetting that IBR forgiveness outside PSLF is currently taxable.
- Assuming a spouse's income is excluded, it is included if you file taxes jointly.
Related terms
Helpful tools
Run the numbers on your specific situation with these calculators and matching tools.