Income Contingent Repayment (ICR) Plan
A repayment plan that bases your
monthly payment on your yearly income,
family size, and loan amount. As your
income rises or falls, so do your
payments. After 25 years, any
remaining balance on the loan will be
forgiven, but you may have to pay
taxes on the amount forgiven.
Each year your monthly payment will be
based on your family size, annual
Adjusted Gross Income (AGI) as
reported on your federal tax return,
and the total amount of your Direct
Loan(s). To participate in the ICR
Plan you must authorize the U.S.
Internal Revenue Service (IRS) to
inform the U.S. Department of
Education (Department) of the amount
of your income. This information will
be used to calculate your repayment
amount, which will be adjusted
annually to reflect changes in your
AGI If you select the ICR Plan, you
will be billed for only the
interest amount that accrues on your
loan each month until you complete and
return the required documentation. We
cannot place you on ICR Plan until we
receive your completed forms.
An independent student is at least 24
years old, married, a graduate or
professional student, a veteran, a
member of the armed forces, an orphan,
a ward of the court, or someone with
legal dependents other than a spouse.
The status of a loan prior to entering
the grace or repayment period.
A loan expense charged by the lender
and paid by the borrower for the use
of borrowed money. The expense is
calculated as a
of the unpaid principal amount (loan amount)
Money borrowed from a lending institution or the
U.S. Department of Education that must be repaid.
The National Student Loans Data System is a
centralized database that stores information on all
U.S. Department of Education loans and grants. NSLDS
also contains borrowers’ school enrollment
information. Borrowers can access this information
online using their Department of Education PIN.
Out of School
Borrowers are "out of school" if they are making
scheduled payments on their federal education loans
(repayment) or they are in a period of grace,
deferment, or forbearance.
The total amount of a borrower's most recent
The date borrower’s payments are received and
applied to their loan accounts.
Your PIN serves as your identifier to allow access
to personal information in various U.S. Department
of Education systems.
Your PIN also acts as your digital signature with
some online forms. Use your PIN to electronically
sign your online Loan Consolidation Application and
Promissory Note, Deferment, or Forbearance forms.
If you do not already have a PIN, you can request
one online by selecting the Request a PIN button
link located on the left menu bar. The PIN you will
receive will be your universal U.S. Department of
PLUS Loans are available to parents of dependent
graduate students and to students enrolled in
graduate and professional programs. PLUS loans are
unsubsidized loans that accrue interest from the
date of disbursement.
A prepayment is an amount in excess of
the amount due on a loan. If borrowers
have more than one Direct Loan, they
must specify which loan they are
prepaying. Like all other Direct Loan
payments, a prepayment first will be
applied to any outstanding fees and
charges, next to outstanding interest,
and then to the principal balance of
the loan(s). There is never a penalty
for prepaying principal or interest on
Direct Loan Program loans.
Principal Loan Balance Outstanding
The total principal amount outstanding
on a borrower's Direct Loan(s).
Principal balance will include the
original amount(s) disbursed for the
loan(s), any adjustments made to the
loan disbursement amount, and any
interest capitalized on the account(s).
The binding legal document that
borrowers sign when they obtain loans.
Promissory notes define the conditions
under which funds are provided and the
terms under which borrowers agree to
pay back the loan. Promissory notes
include information about the interest
rate and about deferment and
Reasonable and Affordable Payments
Rehabilitating a defaulted loan or
making satisfactory payment
arrangements requires borrowers to
make "reasonable and affordable"
payments. The holder of a Direct Loan
or FFEL Program loan determines on a
case-by-case basis what constitutes a
reasonable and affordable payment on
defaulted loans. Loan holders consider
disposable income and such expenses as
housing, utilities, food, medical
costs, work related expenses,
dependent care, and other Federal
education loan debt. Borrowers are
then provided with a written statement
payment and an opportunity to object to those
Rebate (Direct Loan Up-Front Interest Rebate
The amount of the up-front interest rebate given
to Direct Subsidized Loan, Direct Unsubsidized
Loan and Direct Plus Loan borrowers beginning
with loans made for the 2000 - 2001 program
year. The rebate amount is equal to 1.5 percent
of the loan amount borrowed. Borrowers must make
their first 12 required monthly payments on time
or the rebate amount will be added back to the
principal balance on their loans.
The total amount of funds returned to the Direct
Loan Program as unused for the student's
The process of bringing a loan out of default
and removing the default notation on a
borrower's credit report. To rehabilitate a
Direct or FFEL loan, a borrower must make at
least nine (9) full payments of an agreed amount
within twenty (20) days of their monthly due
dates over a ten (10) month period. To
rehabilitate a Perkins Loan, a borrower must
make twelve (12), on-time, monthly payments of
an agreed amount to the Department.
Rehabilitation terms and conditions vary for
other loan types and can be obtained directly
from loan holders.
Repayment (also repayment period)
Making payments on a loan. The "repayment
period" is the period during which payments are
required to be made.
The Direct Consolidation Loan Program offers
four repayment plans with various term
Standard Repayment Plan - Under this plan, you pay a fixed amount of at least $50 each
month for up to 10 to 30 years, based on your
total education indebtedness. This plan may
result in lower total interest paid when
compared to repayment under one of the graduated
If you have not selected a repayment plan by the
time repayment begins, your loan(s) will be
placed on the Standard Repayment Plan.
Graduated Repayment Plan
- Under this plan, you
will pay a minimum payment amount at least equal
to the amount of interest accrued monthly for up
to 10 to 30 years, based on your total education
indebtedness. Your payments start out low, and
then increase every two years. Generally, the
amount you will repay over the term of your loan
will be higher under the Consolidation Graduated
Repayment Plan than under the Consolidation
Standard Repayment Plan. This plan may be
beneficial if your income is low now but is
likely to steadily increase.
Extended Repayment Plan
- To qualify
for this plan, your Direct Loan
balance must be greater than $30,000,
and you will have up to 25 years to
repay your loan(s). Plan options
Fixed Monthly Payment Option
will pay a fixed amount of at least
$50 each month for up to 25 years.
Repayment under this plan will result
in lower total interest paid when
compared to graduated plans with
Graduated Monthly Payment Option - You
will pay a minimum payment amount of
at least $50 or the amount of interest
accrued monthly, whichever is greater,
for up to 25 years. Your payments
start out low and then increase every
two years. Repayment under this plan
may provide lower initial monthly
payments, although the total interest
paid may be greater when compared to
plans with similar terms with fixed
payments. This plan may be beneficial
if your income is low now but is
likely to steadily increase.
**Extended repayment terms are
available to Direct Loan borrower with
no outstanding principal or interest
balances as of October 7, 1998 and
with more than $30,000 in Direct
Income Contingent Repayment (ICR) Plan
- payment amount is based on your
income (and your spouse's income, if
you are married), loan balance and
family size, and can vary year-to-year
for up to 25 years.
Satisfactory Repayment Arrangements
Borrowers in default on Direct Loan
and FFEL Program loans who wish to
consolidate their loans in a plan
other than the Income Contingent
Repayment (ICR) plan must have made
satisfactory repayment arrangements
with the loan holder(s).
consecutive, voluntary, on-time monthly payments
on a defaulted Direct Loan or FFEL Program loan
constitute satisfactory repayment arrangements.
Borrowers must work with their current loan
holders to set up reasonable and affordable
payments. Borrowers who wish to consolidate
defaulted Perkins or health professions loans
should contact their loan holders for
information on satisfactory repayment
arrangements under those programs.
The actual or anticipated date when the
borrowers graduate, leave school, or drop to a
less than half-time status. The separation date
is used to determine the loan's grace period and
the date the first loan payment will be due.
An entity designated to track and collect a loan
on behalf of a loan holder.
Simple Daily Interest
The method used to calculate interest on student
Status (Loan status)
The present state of your Subsidized,
Unsubsidized, PLUS, or Consolidation loan(s).
An account will be either:
A loan for which a borrower is not responsible for
the interest while in an in-school, grace, or
deferment status. Subsidized loans include Direct
Subsidized , Direct Subsidized Consolidation Loans,
Federal Subsidized Stafford Loans and Federal
Subsidized Consolidation Loans.
Total Education Indebtedness
Total Education Indebtedness is the sum of a Direct
Consolidation Loan, and other eligible education
indebtedness, up to an amount equal to the Direct
Consolidation Loan. Total Education Indebtedness is
used to calculate the number of payments under the
Standard and Graduated Repayment Plans (for
examples, click here).
A loan for which a borrower is fully responsible for
paying the interest regardless of the loan status.
Interest on unsubsidized loans accrues from the date
of disbursement and continues throughout the life of
the loan. Unsubsidized loans include: Direct
Unsubsidized Loans, Direct PLUS Loans, Direct
Unsubsidized Consolidation Loans, and Federal
Unsubsidized Stafford Loans, Federal PLUS Loans, and
Federal Unsubsidized Consolidation Loans.
The rate of interest charged on a loan that changes
annually and fluctuates with a stated index.
The process by which a consolidation lender requests
that a loan holder certify a loan's payoff balance.
William D. Ford Federal Direct Loan Program (Direct
The Federal program that provides loans to eligible
student and parent borrowers under Title IV of the
Higher Education Act. The loan programs include
Direct Subsidized Loans, Direct Unsubsidized Loans,
Direct PLUS Loans, and Direct Consolidation Loans.
Funds are provided directly by the federal
government to eligible borrowers through