What changed
- No hardship test. Before the law, you needed a “partial financial hardship” to enter IBR. That requirement is gone; any borrower with eligible loans can elect IBR.
- Payment cap kept. The IBR payment still never exceeds the 10-year standard payment calculated when you first chose IBR, and you may take longer than 10 years.
- Closed to new loans. IBR applies only to loans made before July 1, 2026. A borrower with a newer Direct Loan can’t use it.
- Fallback in 2028. Borrowers on ICR or PAYE must pick a new plan before July 1, 2028. Those who don’t are put in RAP for RAP-eligible loans and IBR for the rest.
- Automatic recertification. The Department is to use IRS data, with your consent, to recalculate payments each year.
The formula
Payment = 10% (or 15%) × (AGI − 150% of the poverty line for your family size) ÷ 12, capped at the 10-year amount. Under $5 becomes $0; $5–$10 becomes $10.
You use 10% with 20-year forgiveness if you had no outstanding federal student loan on July 1, 2014. Otherwise it is 15% with 25-year forgiveness.
2026 poverty lines
| Household | 48 states + DC | 150% of it |
|---|---|---|
| 1 | $15,960 | $23,940 |
| 2 | $21,640 | $32,460 |
| 3 | $27,320 | $40,980 |
| 4 | $33,000 | $49,500 |
Alaska and Hawaii have higher guidelines.
Interest
Unpaid interest builds up on IBR without compounding. For subsidized loans, unpaid interest is waived for the first three years. StudentAid.gov says that starting in spring 2027, payments under IBR must be on time and in full to get that help.
Not financial or legal advice. This page explains the published rules. It does not tell you which plan to choose. Your loan servicer and StudentAid.gov have the final word on your account.
Official sources
- Public Law 119-21 (H.R. 1, signed July 4, 2025), Title VIII, Secs. 81001–82004
- 20 U.S.C. 1098e, income-based repayment (Cornell LII copy of the U.S. Code)
- 34 CFR 685.209, income-driven repayment plans (current eCFR, as amended May 1, 2026)
- HHS/ASPE: 2026 Poverty Guidelines
Last verified Oct 17, 2026. Corrections are logged on What changed.
Next guide: New federal loan limits from July 1, 2026