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The Long-Term Cost of Income-Driven Repayment

By U.S. News & World Report

Choosing an income-driven repayment plan can make your student loan payments manageable if your income is too low to support a standard repayment schedule. But income-driven repayment plans require longer repayment than a standard plan. Payment amounts change over time depending on your income, which can affect the total cost of your loan.

[Read: Best Student Loan Refinance Lenders.]

Lower Monthly Payments Can Cost More

Income-driven repayment plans can make student loan payments more affordable by adjusting monthly payments based on a borrower’s income rather than the balance. These plans can significantly reduce payments for borrowers with limited income, while making it easier to avoid delinquency or default.

However, lower monthly payments typically translate to longer repayment periods.

“Income-driven repayment plans can be a lifeline for borrowers who are struggling financially, as they are intended to make monthly payments more affordable (because they are based on income rather than the loan balance),” says Leslie H. Tayne, finance and debt expert and founder of Tayne Law Group. “The flipside is that the consumer could end up paying more over the life of the loan.”

A lower payment could be the right choice if you need room in your budget, but the long-term cost depends on how long the repayment lasts and whether you qualify for loan forgiveness.

[Read: Best Private Student Loans.]

How Older Income-Driven Plans Compare With RAP

Not all income-driven repayment plans work the same way. Older plans, such as Income-Based Repayment or Pay As You Earn are different than the Repayment Assistance Plan for new borrowers. These differences affect how interest accrues, the length of repayment and how much you pay over time.

Typically, IBR and PAYE set payments based on discretionary income with loan forgiveness after 20 or 25 years of qualifying payments. Borrowers with limited income may have low required payments, sometimes so low that they do not cover the interest accrued each month.

With IBR and PAYE, unpaid interest can accumulate and cause balances to grow over time, says Stacey MacPhetres, senior director of college finance for Bright Horizons. She says the new RAP offers an unpaid interest waiver that prevents balance growth, but extends the forgiveness timeline to 30 years.

Under RAP, borrowers may pay more over the life of the loan despite stronger interest protections.

[Read: Best Student Loans for Graduate School]

What A Low Income-Driven Repayment Can Look Like

Income-driven repayment can make your monthly bill more manageable, but the numbers vary depending on your income, loan balance and plan.

Compare the payments and costs for a borrower with $40,000 in federal student loans at a 6% interest rate, earning $70,000 annually with no dependents. Under a standard 15-year repayment plan for a $40,000 balance, the borrower would pay about $337 per month and about $60,000 over the life of the loan. With IBR or PAYE, the monthly payment would be $388, with forgiveness after 20 years, for a total cost of about $93,000.

Income-driven repayment plans that stretch payments out 25 years or more can cost significantly more. For example, an Income-Contingent Repayment plan would have a payment of $390 with forgiveness after 25 years for a total of about $117,000. RAP payments would be $350 for 30 years and cost about $126,000.

For this borrower, the standard repayment plan has the lowest monthly payment, the shortest payment period and the lowest total cost. But a borrower with $50,000 in annual income could fare better with income-driven repayment. For a borrower with $50,000 in annual income, all income-driven repayment plans except ICR have lower monthly payments and total costs than the standard repayment plan.

However, these calculations assume the same income across the full repayment period of 15 to 30 years, depending on the plan. If you have an income-driven repayment plan, your monthly payment will adjust with your income as you recertify it annually. You could see significant savings in monthly payments and projected total loan cost when you’re new in your career and likely to have a lower income, but the benefits of income-driven repayment may be negated as your income increases.

Income-driven repayment plans will be streamlined in July. The only plan for new borrowers will be RAP, and existing borrowers in ICR or PAYE will need to transition to either IBR or RAP by July 1, 2028.

The right plan depends on your current income and what you expect to earn during the repayment period.

“For borrowers with tight household budgets, it can be helpful to think of lower monthly payments as temporary breathing room instead of a permanent solution,” says Tayne. “If and when your financial situation improves, consider contributing more funding to your loan balance, or channel windfalls (such as a tax return) to your loans. This will help you not only reduce your balance, but limit the cost of interest, too.”

More from U.S. News

How Parents Can Prepare Their Kids for Student Loans

Student Loan Forgiveness ‘Tax Bomb’: Why You Could Owe $10K or More

Can I Transfer My Parent PLUS Loans to My Student?

The Long-Term Cost of Income-Driven Repayment originally appeared on usnews.com

A whisper from the rubble led to baby’s rescue after Colombia earthquake

By CNN
(CNN) — When the deadly 7.4 magnitude earthquake struck Colombia on Monday, Brian Osorio Zuluaga ran out of his office in Cali and rushed home on his motorbike.The sight of a collapsed five-story residential building forced him to stop.“It was a large complex, covering an entire block,” Osorio told CNN.The quake was the strongest to hit Colombia in more than a decade and sent residents and neighbors of the building, La Torres del Limonar, fleeing into the street, “some in sleepwear or pajamas; some crying, others in shock,” Osorio said.He approached the rubble and began shouting into the wreckage for survivors, despite warnings about a possible gas leak.He suddenly asked those around him for silence. A faint sound rose out of the debris — barely a whisper.“Yes, I’m here. I’m with a baby,” a man’s voice replied.Osorio described how he and several others began moving debris with their hands to reach the pair. But a large concrete slab blocked their way.“On the first attempt, we couldn’t lift it,” he said. Then, “we all lifted together — one, two, three, up.”The slab was too heavy to toss aside, and Osorio was worried there could be more people trapped underneath. Some volunteers held it aloft as others cleared a path to the baby.“You can see the baby’s little head there — which, at the time, looked sort of purplish because he couldn’t breathe,” Osorio said. “Once we started removing the rubble, the baby began to… breathe, and his color started to come back.”Video of the remarkable rescue filmed by Osorio shows the tiny infant in a dusty bodysuit being carefully pulled out of the wreckage. A man, his arm bloodied, can be seen lying awkwardly on his side, still half-trapped under a concrete plank.Osorio said he was handed the baby, a boy, and gave him to a police officer, who took him to an ambulance. They then turned their attention to freeing the trapped man.In the rubble, Osorio said he saw clothes, shoes, and a stuffed animal covered in dust. He thought about the people who might still be trapped.“All those thoughts go through your mind,” he said.The bravery of everyone who rushed to help was what saved the lives of both man and baby.“Unity is strength, because no one person alone could have lifted that piece of rubble; it was so large and so heavy,” he said.“It’s better to act than to stand still,” Osorio added. “Every bit helps.”Rescue efforts enter third daySearch and rescue operations entered their third day early on Wednesday, as emergency responders raced to find more survivors after the powerful quake struck western Colombia, killing more than 200 people, according to a CNN count based on reports from officials.The quake struck at the heart of the country’s coffee-growing region and catapulted communities into a state of national disaster as world leaders offered aid and assistance.The European Union has mobilized its satellite service Copernicus and is providing funding to help the response, the bloc’s foreign policy chief Kaja Kallas said.In Cali, a woman was pulled from under a mountain of rubble on Tuesday to cheers as firemen carried her out on a stretcher following a complex, multinational rescue operation.And in Pereira, a CNN team on the ground saw rescue workers and volunteers form a human chain to remove debris and help save those trapped from an apartment building.“There’s folks who have jumped in and you can see they’re wearing everything from athleisure wear to shorts, tennis shoes — they’re not prepared for this,” CNN’s senior national correspondent David Culver said from the site. “We have seen scenes like this scattered throughout Pereira. This is one of the hardest-hit areas.”But in the epicenter of Monday’s earthquake, Chocó, an indigenous leader told CNN that help has yet to reach the area, Colombia’s poorest region.Victor Chamapuro, leader of the Wounaan Indigenous Reserve “Buenavista” in Chocó’s Litoral del San Juan, said “all our houses are on the ground.”“Where are we going to sleep now? We have to be alert now, we’re sleeping outside,” he said.Chamapuro called on authorities to send food and medicine, saying one person in the community was injured.The “Buenavista” reserve can only be reached by boat on a five-hour journey from the port of Buenaventura, on Colombia’s Pacific coast.Video sent by Chamapuro from the reserve shows flattened buildings that appear to be built from timber and corrugated iron sheets. Others are still standing but with varying levels of damage.The earthquake is one of the first major challenges for Colombia’s new far-right President Abelardo de la Espriella, who took office only last week and has promised to strike hard at criminal groups and leftist militants in Colombia.De la Espriella on Tuesday announced economic relief measures for those affected by the quake, and financial support for people who have lost their homes to rent temporary housing.The-CNN-Wire™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
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