Can you be denied an income-driven repayment plan? | Earnest

What to do if you’re denied an income-driven repayment plan

By Sasha Bulatskaya | Published on October 21, 2025

Are you thinking about enrolling in an income-driven repayment plan for your federal student loans but worried about being denied? While many borrowers have benefitted from federal income-driven repayment plans, not everyone can qualify*.

*As a result of ongoing court actions, the terms of some Income-Driven Repayment (IDR) plans, including the SAVE plan, may be subject to change. Please refer to studentaid.gov for the current status of these plans.

In this post, we’ll go over the basics of income-driven repayment plans, how someone could be denied, and your alternatives.

Understanding Income-Driven Repayment (IDR) Plans

Income-driven repayment plans (IDRs) offer borrowers a lifeline by adjusting their monthly payments based on factors like income and family size. These plans play a crucial role in making student loan repayments more manageable for many.

Types of IDR Plans

SAVE Plan: Although this plan is currently being impacted by court actions, it’s the most comprehensive IDR plan. It’s a better fit for those with low income. However, if you make more money, your payments might be higher on this plan than on the standard 10-year repayment plan.

PAYE (Pay As You Earn) Plan: This plan uses your income and family size to determine how much you’ll pay and allows for a 20-year repayment plan.

IBR Plans: As of September 2024, this is the only IDR plan that allows you to make income-driven payments while your loans are in default.

ICR Plan: This plan uses 20% of your discretionary income. However, you cannot enroll in this IDR after July 1, 2024, unless you fall into the exception category.

*As of July 1, 2024 both the IDR and PAYE Plans are not taking new enrollments with two of the following exceptions:

  1. If you already applied before that date but your application hasn’t been processed yet, or you
  2. You have a consolidation loan that repaid a Parent PLUS Loan, you can still enroll in the ICR Plan but not PAYE.

Benefits of IDR plans:

Why would you be denied an IDR plan?

Despite the accessibility of income-driven repayment plans, there are scenarios that might lead to the denial of your application:

Documentation and income reporting: Accurate financial information is key to the application process. Inaccuracies or missing documentation about your income could result in a denial.

Eligibility criteria: Meeting the specific eligibility requirements for each plan is essential. FFEL, HEAL, and Perkins Loans need to be consolidated to qualify for some IDR Plans and student loan forgiveness programs. If you don’t take this step, you may be denied based on the eligibility criteria.

Loan types and qualifying programs: Not all federal student loans are eligible for all income-driven repayment plans. FFEL PLUS Loans made to parents, for example, are not eligible for SAVE, PAYE, and IBR Plans. However, they’re eligible for an ICR Plan if consolidated.

Some student loan borrowers may need to consolidate their loans into a Direct Consolidation Loan in order to qualify.

What to do If your IDR application is denied

If your application is denied, visit the IDR page on the studentaid.gov website and review the eligibility criteria again. You should also take a look at these options:

Review and correct: Take the time to understand why your application was denied and address any issues that might have contributed to the decision.

Consider an appeal: If you believe the denial was a mistake, you have the option to appeal the decision and provide additional information for reconsideration.

Contact your student loan servicer: If your application is denied, reach out to your servicer. They will tell you the reason why you could not be approved.

Explore alternatives: If income-driven repayment isn’t an option, there are other repayment plans, forbearance, deferment, or refinancing. All of these are options worth exploring.

Rate for refinancing just dropped, making it a good alternative

If you can’t be approved for an income-based repayment plan or you make too much money to qualify for lower payments, refinancing¹ could be the right option for you.

Refinancing could help you lower your interest rate and payment². It could also make it easier to pay off your loans faster if you refinance for a lower rate and continue to make the same payment as before.

The Fed recently lowered interest rates for the first time since 2020, making it a good time to refinance your student loans. To find out if refinancing will help you save money, you can check your rate and use our refinancing calculator to see your new loan repayment plan. Don’t worry, the rate check won’t impact your credit score.

What is refinancing?

Refinancing involves paying off your old loans with money from a new lender. Once that process is complete, your federal loans will become private student loans, and you’ll start payments with your new lender.

Before you apply for refinancing, you should check your credit score and make sure you meet the eligibility requirements. You can shop around for rates, and check your rate at Earnest in 2 minutes.

Think carefully before refinancing federal student loans

Although refinancing could help you save, it will convert your federal student loans into private loans. Once that happens, you won’t qualify for any federal student loan forgiveness programs such as Public Service Loan Forgiveness (PSLF), federal student aid, and other federal benefits.

Know your options if an IDR isn’t right for you

When it comes to managing student loan debt, understanding the application process, U.S. Department of Education regulations, loan balances, and how they impact your loan principal is key. Whether you opt for an IBR Plan, or other repayment options—it’s about finding a solution that works for you.

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About the Author

Sasha Bulatskaya

Sasha is the Senior Manager of Brand and Content at Earnest. She has been writing for ten years and has been focused on educational finance and financial aid for over three. Her passion for mission-driven companies brought her to Earnest in 2020, and she's been helping make student finance more accessible ever since. She strives to demystify personal finance and student loans to help borrowers make the best decisions for their financial situation.

Disclaimer

This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.

1 Please note that you may lose benefits associated with your underlying federal loans, such as federal Income-driven Repayment Plans (an example of which is the SAVE plan), Economic Hardship Deferment, Public Service Loan Forgiveness, or other deferment and forbearance options, if you refinance into a private loan. If you file for bankruptcy, you may still be required to pay back this loan.

2 Choosing to refinance to a longer term may lower your monthly payment, but increase the amount of interest you may pay. Choosing to refinance to a shorter term may increase your monthly payment, but lower the amount of interest you may pay. Review your loan documentation for the total cost of your refinanced loan.