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Loan repayment · Income-driven plans · Forgiveness
The default repayment plan is rarely the best option for Arizona students. Income-driven repayment can cap payments at $0 when income is low, and PSLF can eliminate your entire balance after 10 years if you work in public service. This guide explains your real options — without the jargon.
2025 update: The SAVE plan is under active litigation. Payments are paused for SAVE borrowers while courts decide its future. Check studentaid.gov for the latest status before enrolling or counting on SAVE terms.
Repayment plan comparison
Standard Repayment
Payment
Fixed monthly payment
Term
10 years
Best for: Borrowers who can afford the payments and want to minimize total interest
Watch: Highest monthly payment of any plan — if this is unaffordable, an IDR plan prevents default
SAVE (Saving on a Valuable Education)
Payment
5–10% of discretionary income
Term
10–25 years depending on loan amount
Best for: Most borrowers — especially those with lower income relative to debt. Replaces REPAYE.
Watch: Currently under litigation as of 2025 — payments may be paused or plan terms may change. Check studentaid.gov for latest status.
IBR (Income-Based Repayment)
Payment
10–15% of discretionary income
Term
20–25 years
Best for: Borrowers who took out loans before 2014 or want a stable IDR plan not subject to current SAVE litigation
Watch: Older borrowers (pre-2014 loans) pay 15%; newer borrowers pay 10%
PAYE (Pay As You Earn)
Payment
10% of discretionary income
Term
20 years
Best for: New borrowers who need low payments and want a 20-year forgiveness timeline
Watch: Requires financial hardship to qualify; not available to all borrowers
ICR (Income-Contingent Repayment)
Payment
20% of discretionary income OR fixed 12-year amount, whichever is less
Term
25 years
Best for: Parent PLUS borrowers who consolidate into a Direct Consolidation Loan (the only IDR they qualify for)
Watch: Highest IDR payment — use only when other IDR plans are unavailable
Loan forgiveness programs
Public Service Loan Forgiveness (PSLF)
120 qualifying payments (10 years) while working full-time for a qualifying employer: government, nonprofits, tribal orgs
Must be on an IDR plan (or Standard — but Standard payments exhaust the loan in 10 years, so IDR is the practical choice)
AZ angle: State of AZ agencies, AZ public universities (ASU, UA, NAU), public school districts, and most nonprofits all qualify
Tax status: Tax-free forgiveness
IDR Forgiveness (20–25 year)
Any remaining balance after 20–25 years on an income-driven plan is forgiven
Year count depends on the plan and when you borrowed
AZ angle: No employer requirement — available to any borrower on an IDR plan
Tax status: Taxable income in the year of forgiveness (the "tax bomb") — plan ahead
Teacher Loan Forgiveness
5 years of full-time teaching in a low-income school or educational service agency
Up to $17,500 forgiven for math, science, or special ed teachers; $5,000 for others
AZ angle: Many AZ Title I schools qualify — check the Teacher Cancellation Low Income Directory
Tax status: Tax-free forgiveness
5 repayment mistakes that cost borrowers thousands
Defaulting instead of switching to IDR
Any income — even zero — qualifies for IDR. A $0/month payment beats default, which wrecks credit and triggers collection.
Ignoring PSLF eligibility if you work in public service
Even 5 years of public service work retroactively counts if you certify employment. Check now — years you already worked may qualify.
Making extra payments on IDR when pursuing PSLF
Extra payments don't accelerate PSLF forgiveness — only qualifying payments (120 minimum) count. Save that money instead.
Capitalizing interest by leaving deferment/forbearance
When interest capitalizes (adds to principal), your balance grows and you pay interest on the interest. IDR is better than forbearance.
Missing the annual recertification deadline for IDR
You must recertify income every year. Missing the deadline temporarily raises your payment. Set a calendar reminder 60 days before.
Quick decision guide — which plan is right for you?
You work or plan to work in government, public schools, or nonprofits
Get on an IDR plan + certify PSLF employment immediately. Every qualifying payment counts.
Income is low relative to your debt (debt > 1× annual income)
IDR (SAVE if available, IBR otherwise). Monthly payment is capped at a % of discretionary income — may be $0.
Income is high enough to pay off the loan in 10 years comfortably
Standard Repayment. You'll pay the least total interest.
You're a Parent PLUS borrower
Consolidate into a Direct Consolidation Loan, then enroll in ICR. ICR is the only IDR option for Parent PLUS.
You want to pursue teaching and went to school in AZ
Check Teacher Loan Forgiveness ($5K–$17.5K) AND PSLF — they can't be combined for the same payments, but TLF is faster if you qualify for the $17.5K amount.
What to do next