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Income-Sensitive Repayment (ISR) is a federal student loan repayment plan available only to borrowers with Federal Family Education Loan (FFEL) Program loans. Your monthly payment is calculated as a percentage of your gross monthly income, typically between 4% and 25%, and must be high enough to at least cover the interest accruing on the loan that month. The plan has a maximum term of 10 years and requires annual income recertification to stay enrolled.
ISR is not available for Direct Loans. Federal Student Aid confirms that ISR applies exclusively to FFEL loans, which were disbursed before the FFEL program ended in July 2010.
Your servicer determines your specific payment percentage within the 4% to 25% range. Two borrowers with identical incomes but different servicers may receive different payment amounts. There is no standard formula, and servicer discretion is built into the program.
ISR uses your adjusted gross income, the same figure reported on your federal tax return. This is a critical distinction from other income-driven plans: plans like Income-Based Repayment calculate payments based on discretionary income, which is income above 150% of the federal poverty guideline for your family size. That base deduction typically produces lower monthly payments than ISR generates from the same gross income figure.
ISR's 10-year maximum is shorter than Income-Based Repayment (20 to 25 years) or Income-Contingent Repayment (25 years). The shorter timeline pays off debt faster, but if your early payments were low because your income was low, your payments will increase in later years to ensure the balance is cleared within 10 years.
Credible notes this plainly: borrowers who received lower payments early in the plan sometimes face significantly higher payments toward the end to satisfy the remaining balance on time. If your income did not rise as projected, this can become a financial strain rather than a relief.
Unlike Income-Based Repayment, ISR does not provide any loan forgiveness at the end of the repayment term. You pay off the full balance or you have a problem. ISR also does not qualify for Public Service Loan Forgiveness, which requires an eligible income-driven repayment plan attached to Direct Loans.
Most FFEL borrowers who want PSLF eligibility or long-term forgiveness have consolidated their loans into the Direct Loan program through a Federal Direct Consolidation Loan, which converts the debt and opens access to IBR and other qualifying plans.
ISR works best for FFEL borrowers who need short-term payment relief and expect their income to grow enough to handle increasing payments before the 10-year term ends. It is the wrong plan for anyone seeking long-term income management, forgiveness, or PSLF credit.
Credible confirms that most remaining FFEL borrowers have already transitioned to other plans. Few active ISR participants remain because the program's limitations are significant compared to what Direct Loan consolidation makes available.
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