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.

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