PAYE vs. ICR: how these income-driven plans work for student loans

After closing enrollment in July, the Department of Education has now reopened two of its income-driven repayment plans: Paye as You Earn and Income-Contingent Repayment. As of Dec. 16, 2024, borrowers can once again enroll in these plans, which allow those with federal student loans to adjust their monthly loan payments based on their income and family size, potentially lowering the amount of payments due.

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Initially, the Department of Education’s plan was “phasing out the two plans in favor of an alternative with better terms,” instead encouraging them “to sign up for the administration’s Saving on a Valuable Education program, also known as SAVE,” said The New York Times. But after the SAVE plan faced numerous legal challenges, the department said in an announcement that it had decided to “‘give borrowers more breathing room on their student loans’ while the department continued ‘vigorously defending the SAVE Plan in court,'” said the outlet.