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Did you know about 43 million Americans have federal student loan debt? In 2024, the total student loan debt, including both federal and private loans, in the United States is $1.74 trillion.
According to the Education Data Initiative, the average student loan debt is $37,338. For doctors, that number is significantly higher. On average, physicians graduate with $250,995 in student debt, dentists with $286,000, and veterinarians with $183,302. (Our data shows it’s even higher at $298,457 for physicians!)
When it comes to paying these hefty loan balances, doctors with federal loans have three main options: repay, refinance or get forgiveness. (Find more about private or previously refinanced student loans here). Those who choose to repay or work toward forgiveness have the option to use an income-driven repayment (IDR) plan. Here’s what you need to know about IDR.
What is an IDR plan?
An IDR plan is a type of repayment plan for federal student loans. Under an IDR plan, your monthly loan payments are based on your income and family size, rather than the amount you owe.
The four types of IDR plans are:
- Saving on a Valuable Education (SAVE) Plan—formerly the REPAYE Plan
- Pay As You Earn (PAYE) Repayment Plan (set to be phased out on July 1, 2024)
- Income-Based Repayment (IBR) Plan
- Income-Contingent Repayment (ICR) Plan (set to be phased out on July 1, 2024)
What are the differences between the IDR plans?
Income-Based Repayment (IBR):
- Monthly payments capped at 10% or 15% of your discretionary income
- For new borrowers on or after July 1, 2014, payments are capped at 10% of discretionary income. For borrowers before July 1, 2014, payments are capped at 15%.
- Loan balance is forgiven after 20 years of qualifying payments (for new borrowers) or 25 years (for borrowers before July 1, 2014).
Pay As You Earn (PAYE):
- Monthly payments capped at 10% of your discretionary income and adjusts annually based on changes in income and family size
- To qualify for PAYE, you must be a new borrower as of October 1, 2007, and have received a disbursement of a Direct Loan on or after October 1, 2011.
- Loan balance is forgiven after 20 years of qualifying payments.
Saving on A Valuable Education (SAVE):
- SAVE replaces the REPAYE plan
- Monthly payments capped between 5% and 10% of your discretionary income
- Interest not covered by your monthly payment is waived
- Loan forgiveness after 20-25 years of qualifying payments
Income-Contingent Repayment (ICR):
- Monthly payments capped at the lesser of 20% of your discretionary income or what you would pay on a fixed 12-year repayment plan, adjusted according to your income.
- Loan forgiveness after 25 years of qualifying payments
Which IDR plan are my loans eligible for?
Different loan types are eligible for different IDR plans.
| Loan Type | IBR Plan | ICR Plan | PAYE Plan | SAVE Plan |
|---|---|---|---|---|
| Direct Subsidized Loans | ||||
| Direct Unsubsidized Loans | ||||
| Direct PLUS Loans made to graduate or professional students | ||||
| Direct PLUS Loans made to parents | if consolidated | |||
| Direct Consolidation Loans that did not repay any PLUS loans made to parents | ||||
| Direct Consolidation Loans that repaid PLUS loans made to parents | ||||
| Subsidized Federal Stafford Loans (from the FFEL Program) | if consolidated | if consolidated | if consolidated | |
| Unsubsidized Federal Stafford Loans (from the FFEL Program) | if consolidated | if consolidated | if consolidated | |
| FFEL PLUS Loans made to graduate or professional students | if consolidated | if consolidated | if consolidated | |
| FFEL PLUS Loans made to parents | if consolidated | |||
| FFEL Consolidation Loans that did not repay any PLUS loans made to parents | if consolidated | if consolidated | if consolidated | |
| FFEL Consolidation Loans that repaid PLUS loans made to parents | if consolidated | |||
| Federal Perkins Loans | if consolidated | if consolidated | if consolidated | if consolidated |
3 ways IDR plans help doctors
- Lower Monthly Payments: IDR plans base monthly payments on the borrower’s discretionary income, which is often lower during residency or when starting a practice. This can help ease the financial burden of student loan debt during the early stages of your career.
- Financial Flexibility: With lower monthly payments, doctors can allocate more funds toward other essential expenses such as housing, insurance, and other costs. This flexibility can be crucial, especially during times of transition or when faced with unexpected expenses.
- Loan Forgiveness Options: IDR plans often offer loan forgiveness after a certain period (typically 20 or 25 years) of making qualifying payments. For physicians, dentists, and veterinarians who may have high levels of debt relative to their income, loan forgiveness can provide significant relief from remaining balances after the forgiveness period.
Which IDR plan is right for my needs?
Choosing between IDR plans is dependent on your loan balance, type(s), personal finances and more. Here are a few tips to guide you as you choose the right IDR plan:
- PAYE: PAYE is a good option if you graduate medical school with a spouse with a high income because you can exclude your spouse’s income from your monthly payment calculation if you file taxes separately.
- SAVE: The SAVE plan can benefit most student loan borrowers because it prevents your balance from growing as long as your monthly payments are made.
- ICR: ICR is best for Parent PLUS plans that have been converted to direct loans because it’s the only plan that allows them.
- IBR: IBR is the least likely plan to be useful for your needs.
The best way to find the best IDR plan for your individual needs is to use the Loan Simulator on the StudentAid.Gov. The simulator can show you options for lowering your monthly payments, paying off your loans faster, and consolidating your student loans. Find it here.
Tips for managing student loans
With the right information and understanding of your options, you can make informed decisions about repaying your student debt. Find tips for repayment and refinancing in our free ebook “A Doctor’s No-Nonsense Guide to Student Loans.” Download it today.
