The Income Contingent
Repayment (ICR) plan is designed to make repaying education loans easier for
students pursuing jobs with lower salaries. This option is an excellent choice 
for recent law school
graduates who are considering careers outside of law or careers that don't pay
enough to cover the minimum payments required on their student loans.
How ICR Works
First of all, ICR plans are
only available from the U.S. Department of Education; however some private
lenders do offer "income sensitive repayment plans." If you have student loans made directly
through the Department of Education's Direct Loan program you can contact them
directly to apply for the program.
The student's loan repayments are calculated by the amount of money they
earn and the number of people in their family. For example, a family of four (two parents and two kids)
would pay less in monthly payments on a $100,000 student loan than a single
person. To determine your monthly
payments you will need to provide proof of income via a W-9 or 1099 form and
sign a sworn statement that your stated income is accurate. You will also need
to state how many people there are in your family. Roommates and non-related persons cannot be counted as
family for the purposes of our ICR plan. Once your monthly repayment amount is
determined you will have 25 years to repay the loan, with the balance of the
loan forgiven at the end of 25 years.
The portion of the student loan that is forgiven is treated as taxable
income.
If your monthly payments
don't cover the interest of your loan, the unpaid interest is added to the
principal once a year; however capitalized interest on a student loan in this
program is capped at 10% of the original loan amount. To find out more about
the Income Contingent Repayment Plan call 800-557-7392.