DEFINITION of 'Income Sensitive Repayment - ISR'

A method of repayment for loans that are serviced by lenders participating in the Federal Family Education Loan Program (FFELP). The ISR is intended to make it easier for borrowers with lower paying jobs to afford their monthly loan payments. The ISR is an alternative to the income contingent repayment. The monthly loan payment amount is based on a fixed percentage of the borrower's gross monthly income, between 4% and 25%. The monthly payment must be greater than or equal to the interest that the loan accrues.

BREAKING DOWN 'Income Sensitive Repayment - ISR'

Income sensitive repayment allows lower-earning borrowers to reduce their monthly payment amount, depending on the gross monthly income. This method of repayment increases the total amount of interest that will be paid on the loan. Borrowers must apply each year to be eligible for ISR, and must provide a copy of their tax returns and/or W-2s.

RELATED TERMS
  1. Term Loan

    A loan from a bank for a specific amount that has a specified ...
  2. Student Loan Forgiveness

    Under certain circumstances, federally backed student loans — ...
  3. Repayment

    The act of paying back money previously borrowed from a lender. ...
  4. Direct Consolidation Loan

    A loan that combines two or more federal education loans into ...
  5. Standing Loan

    A type of loan where payments are made of interest only. Repayment ...
  6. Character Loan

    A character loan is a type of unsecured loan that is made on ...
Related Articles
  1. Personal Finance

    Creative Ways To Overcome Student Debt

    There's many available student debt repayment options and strategies, such as student loan initiatives and loan consolidation plans.
  2. Personal Finance

    How to Get Your Student Loans Forgiven

    The prospect of debt forgiveness may seem like a dream come true. In reality, though, not that many people end up being eligible.
  3. Personal Finance

    Will Trump Be Good for Student Loan Borrowers?

    Donald Trump proposed some significant changes to student loans during his campaign.
  4. Personal Finance

    How Residents and Physicians Can Tackle Student Debt

    Here's how residents and young physicians can tackle their debt load while saving.
  5. Retirement

    Business Owners: A Guide To Qualified Retirement Plan Loans

    Thinking of adding a loan feature to your company's plan? Here's what you need to know.
  6. Financial Advisor

    Deal with Your College Debt Using These Steps

    The worst thing to do with college debt is to ignore it. The best way to start tackling it is with a clear roadmap to financial freedom.
  7. Financial Advisor

    Student Loan Debt: What Every Borrower Should Know

    If you must take on student debt, you should know the different types of loans and federal programs available well before graduating.
  8. Personal Finance

    Trump’s Student Loan Repayment Plan: Could It Help You?

    Donald Trump’s student loan repayment plan is still just an idea, but if it shapes up as promised, it could save you money.
  9. Personal Finance

    Home Improvement Loans: What Are Your Best Options?

    If you plan on taking out a home improvement loan, you should know what your options are and which ones might be best for your situation.
  10. Personal Finance

    Time To Consolidate Your Student Loans?

    Use these strategies to decide whether consolidating your student loans makes sense for you – and what to do next if it does.
RELATED FAQS
  1. Are secured personal loans better than unsecured loans?

    Read about the differences between secured loans and unsecured loans and how they are used. Learn about forms of collateral ... Read Answer >>
  2. What are the typical repayment terms for a syndicated loan?

    Learn more about syndicated loans and how they are structured, specifically including the typical repayment terms for a syndicated ... Read Answer >>
  3. How does accrued interest work on student loans?

    Learn how student loan borrowers are affected by accrued interest on outstanding loans balances while in deferment and during ... Read Answer >>
  4. Can student loans hurt your credit?

    Paying student loans on time helps build credit; failure to do so, hurts it. Read Answer >>
Trading Center