If you’re facing high student loan payments and have an older federal student loan, the Income-Sensitive Repayment Plan (ISRP) might come up as an option. Designed exclusively for FFEL program loans issued before 2010, ISRP links your monthly payment to your income, adjusting payments annually to reflect your financial situation.
How Does the Income-Sensitive Repayment Plan Work?
Unlike today’s federal income-driven repayment plans (IDRs), ISRP is managed by your private loan servicer rather than the federal government, meaning each lender can set different terms and payment formulas. Payments under ISRP are generally calculated as a percentage of your gross monthly income with the goal of paying off the loan within 10 years, although lenders may sometimes extend this period by up to five years, increasing your total interest paid.
Key Features of ISRP:
- Eligible Loans: Only FFEL Program loans qualify. Direct Loans are not eligible.
- Lender-Controlled Terms: Payment calculations vary by lender.
- No Loan Forgiveness: Loans must be repaid in full; there is no forgiveness after a set period.
- Annual Income Recertification: Borrowers must annually verify income to adjust payments.
How ISRP Compares to Modern Income-Driven Repayment Plans
Modern IDR plans like SAVE (Saving on A Valuable Education), PAYE, and IBR provide standardized terms, capped payments based on discretionary income, and potential loan forgiveness after 20-25 years. They also offer interest subsidies that help reduce long-term costs.
In contrast, ISRP:
- Does not offer loan forgiveness.
- Lacks interest subsidies, so unpaid interest accrues and capitalizes.
- Has no uniform payment rules, which can lead to higher or less predictable payments.
For many borrowers, consolidating FFEL loans into a Direct Consolidation Loan opens access to superior IDR plans with better protections and benefits.
When Should You Consider ISRP?
ISRP may be useful for FFEL borrowers seeking temporary payment relief without consolidation. However, because it doesn’t qualify for Public Service Loan Forgiveness (PSLF) or offer forgiveness itself, it usually isn’t the best long-term strategy. Borrowers are often advised to explore Direct Consolidation and enroll in federal IDR plans to maximize benefits.
Frequently Asked Questions
How do I enroll in ISRP?
Contact your FFEL loan servicer directly, since this plan isn’t managed through the Department of Education.
Does ISRP count toward Public Service Loan Forgiveness?
No. Only payments under federal IDR plans for Direct Loans count toward PSLF.
Can I switch repayment plans later?
Yes. You can change plans anytime. Consolidating FFEL loans to Direct Loans is usually the route to accessing better repayment options.
For more detailed guidance, visit the official Federal Student Aid website on ISRP.
Sources:
- U.S. Department of Education, Federal Student Aid: Income-Sensitive Repayment Plan [https://studentaid.gov/manage-loans/repayment/plans/income-sensitive]
- NerdWallet: Income-Driven Repayment Plans for Student Loans [https://www.nerdwallet.com/article/loans/student-loans/income-driven-repayment-plans]
Consider also reviewing our articles on Direct Consolidation Loans and Income-Driven Repayment Plans for strategies on managing federal student loan debt more effectively.