How to pick the right student loan repayment plan for you in 2025? What to you need to know

The Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans were reopened as an alternative for borrowers, including teachers, public service workers, and low-income individuals. These plans offer a way to structure payments based on earnings, which can be a lifeline for those with variable or low incomes.

These plans base monthly payments on income and family size, with the added benefit of debt forgiveness after a set period of time.

PSLF offers borrowers in qualifying public service jobs the possibility of debt forgiveness after 10 years of payments. While those in SAVE’s interest-free forbearance do not accrue credit for forgiveness during the hold, enrolling in PAYE or ICR will allow them to resume earning credit for debt cancellation.

Key features and considerations

The PAYE and ICR plans are designed to help borrowers who are struggling with their student loans by offering lower monthly payments. The PAYE plan limits monthly payments to 10 percent of a borrower’s discretionary income, with the potential for loan forgiveness after 20 years of payments.

The U.S. Department of Education has announced the reopening of two popular income-driven student loan repayment plans, giving borrowers more options to manage their debt. The Pay As You Earn (PAYE) Repayment Plan and the Income-Contingent Repayment Plan (ICR) will now be available for enrollment, helping those struggling with student loan repayments.

It also provides a key benefit by excluding the first $22,590 of income for individuals, or $46,800 for a family of four, from being considered when calculating monthly payments. This makes the PAYE plan one of the most affordable options for many borrowers.

Despite these legal battles, the Education Department has continued to provide other options for borrowers who may benefit from income-driven repayment (IDR) plans.

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