Income-Sensitive Repayment

Income-sensitive repayment lets Federal Family Education Loan Program (FFELP) borrowers decide what percentage of their income their loan payment will be. Borrowers in the Direct Loan (DL) program loans have the option of income-contingent repayment.

When selecting that percentage—and this payment schedule—remember that your payments will eventually increase. Still, if you have a job with a lower salary, this plan could work for you.

How It Works

  • You select a monthly payment amount between 4%–25% of your monthly income.
  • Your payment must be greater than or equal to the interest accruing on your loan.
  • You must reapply for this schedule every year.
  • It is available to you for up to 5 years.
  • After 5 years, you will need to choose another repayment schedule. You may have up to 10 additional years under your new schedule.
  • Income-sensitive repayment extends your repayment period. As a result, the total amount you pay in interest may be greater than what you would pay under standard repayment.

If your income was $16,800 and you had $10,000 in loans at a 6.8% interest rate, your payments could look like this:

 Standard RepaymentIncome-Sensitive Repayment Plan
Number of Payments120 (10 years)180 (15 years)
Monthly Payment Amount$115$56 (for 5 years); $115 (remainder of payment)
Total Cost of Interest$3,810$7,210
Total Amount Repaid$13, 810$17,210

See what your payments could look like under this schedule with our income-sensitive repayment calculator.

Changing Your Repayment Schedule

Call your servicer to find out what you need to do to change your repayment plan. Your servicer may be able to make the change over the phone, or they may require you to fill out paperwork and provide documentation.

You can also contact American Student Assistance® (ASA) for help. Our counselors can help you determine the schedule right for you, and we can also call your servicer with you.

Remembering Your Anniversary Is Important

You will need to reapply annually if you wish to remain in any of the “income-driven” repayment plans (Income-Contingent, Income-Sensitive, Income-Based and Pay As You Earn).  This means that you must update your income information every year before your annual anniversary of enrolling in the program so that your monthly payment amount for the next year can be determined.  Your loan servicer will send you a notification to provide documentation of your Adjusted Gross Income (AGI) and to self-certify your family size no later than 60 days and no earlier than 90 days prior to your annual deadline. 

The notice will also contain:
• Your annual  renewal deadline
• The consequences to you if the servicer does not receive your renewal information
• Your new monthly payment amount and effective date if you no longer qualify for or miss the annual deadline
• An explanation that unpaid accrued interest will be capitalized at the end of your current annual payment period

Missing your deadline can result in a much higher monthly payment than your income-driven payments as well as a significant amount of interest capitalizing, or being added on to, your loan balance.  Be sure to make note of your anniversary date and proactively contact your servicer if you don’t receive this notification.