This repayment alternative is available to some federal loan borrowers (check with your lender or servicer to learn if your loans qualify for this alternative). Income sensitive repayments bases the monthly payment on the borrower's income in relation to total federal loan indebtedness. Under this option, monthly payments can drop to as low as the amount of interest that accrues on the loan's principal balance. Borrowers must apply for this option annually and must provide documentation of income - usually in the form of a federal tax return.