The Department of Education has announced the annual updates to the ICR plan formula for 2025 to give notice to borrowers and the public regarding how monthly ICR payment amounts will be calculated for the 2025-2026 year under the William D. Ford Federal Direct Loan (Direct Loan) Program, Assistance Listing Number 84.063.
The Department’s 2025 update to the ICR plan formula offers borrowers improved affordability through inflation-adjusted repayment factors. With clear examples, accessible tools, and thorough guidance, this update helps borrowers understand and navigate their student loan obligations more effectively during the 2025–2026 repayment year.
The updated income percentage factors apply July 1, 2025 through June 30, 2026—affecting borrowers newly entering the ICR plan or having payments recalculated during this period. The ICR plan calculates loan repayments based on factors like Adjusted Gross Income (AGI), family size, loan amount, and interest rates. Because of inflation adjustments, a borrower’s ICR payment may actually decrease year over year, even if their income remains the same, providing relief aligned with economic trends.
Borrowers can use the Loan Simulator on studentaid.gov to estimate payments under the updated ICR formula.
What’s Included in the Notice:
- Attachment 1: A detailed table of updated income percentage factors for singles vs. married/head-of-household borrowers.
- Attachment 2: Real-life examples illustrating how monthly payments are calculated under the new formula (including single and married borrowers).
- Attachment 3: Charts showing sample first-year ICR repayment amounts for single and married borrowers across a range of AGIs and loan balances.
To view this Federal Register publication, click here.