Income-Driven Repayment 101 – The Institute for College Access & Success

Under our current system of financing higher education—where millions of students face an “affordability gap” between college costs and available aid—the federal student loan program serves as a critical access tool. Without it, millions of students could not afford to enroll in college. The income-driven repayment (IDR) system was created in the early 1990s in response to a growing problem: too many federal student loan borrowers couldn’t afford their monthly payments under “standard” loan repayment plans.

This brief explains the origin and purpose of the IDR system for federal student loans, outlines the current state of the system as well as its statutory and regulatory history, and explains how the system overhaul proposed by the College Cost Reduction Act would increase costs for borrowers. Attached is also a chart summarizing existing income-driven repayment options for federal student loans.