Income-driven repayment calculator

Income-driven repayment: the four plans and their math

Income-driven repayment (IDR) plans cap your monthly federal student loan payment at a percentage of “discretionary income” — typically defined as AGI minus 150–225% of the federal poverty line for your family size. After 20–25 years of qualifying payments, any remaining balance is forgiven (though the forgiven amount may be taxable as ordinary income after 2025, depending on legislation).

How discretionary income is calculated

2025 HHS poverty guidelines (contiguous 48 states, Alaska and Hawaii have higher figures):

• 1-person: $15,060
• 2-person: $20,440
• 3-person: $25,820
• 4-person: $31,200
• 5-person: $36,580
• Each additional: +$5,380

For a single filer with AGI $55,000 on PAYE: discretionary income = $55,000 − (1.5 × $15,060) = $32,410. Monthly payment = ($32,410 × 10%) / 12 = $270.

The married-filing-separately hack

PAYE and IBR exclude a spouse’s income from the payment calculation if you file taxes married filing separately (MFS). SAVE, under rules originally in effect, used joint income regardless of filing status.

Impact: a borrower making $60K with a spouse making $100K could see their PAYE payment drop from $700/mo (joint, $160K combined) to $270/mo (separate, $60K alone) by switching to MFS. Trade-off: MFS has fewer tax benefits (you lose student loan interest deduction, child tax credit treatment is different, higher tax brackets on the same income). Run both options — an accountant should analyze before you commit.

Tax bomb concerns

Historically, the balance forgiven at the end of an IDR plan was treated as taxable income — a borrower whose $150K balance was forgiven would owe $30K–$45K in federal tax that year. The American Rescue Plan Act made forgiveness tax-free through 2025; legislation since 2024 has considered extensions. As of early 2026, confirm current tax treatment before relying on forgiveness.

When IDR is the right answer

• Your debt-to-income ratio exceeds 1.5:1 (see DTI calculator).
• You’re pursuing PSLF (see PSLF calculator) — IDR is required to get PSLF-eligible payments.
• You’re in a low-income residency or fellowship stretch.
• You have high-balance grad school debt with uncertain salary trajectory.

When IDR costs more long-term

If your income rises quickly and you stay on IDR for years, the math can turn against you. Lower payments = more interest accruing = larger total paid. Borrowers with stable $100K+ incomes who won’t pursue forgiveness often pay $20K+ more on IDR than on Standard 10-year.

Heuristic: if you’re not pursuing forgiveness AND your starting salary is above your debt balance, Standard 10-year is usually cheaper.

Three borrower walkthroughs with dollar figures

Borrower A — Teacher, $55K balance, $48K income, single, PSLF track: SAVE (if available) 5% payment = $48,000 - $33,885 (225% poverty line) = $14,115 × 5% = $706/year = $59/month. Over 10 years of teaching at similar income, total paid ~$7,000. Remaining $50K+ forgiven under PSLF. Vs. Standard 10-year = $630/month, $75,600 total. Net benefit of IDR + PSLF: ~$68,500.

Borrower B — First-year resident physician, $310K balance at 6.8% avg, $72K salary, pursuing PSLF at academic medical center: PAYE payment = ($72K - $22,590) × 10% / 12 = $412/month. During 4-year residency + 3-year fellowship = 7 years at similar payments ($412-$625 as salary rises with years). After transition to attending at academic hospital at $280K (year 8-10): PAYE payment caps at Standard 10-year equivalent ~$3,500/month. Total paid over 10 years: ~$130K. Balance at PSLF forgiveness: ~$250K. PSLF saves ~$120K net after tax-free forgiveness.

Borrower C — Private-sector software engineer, $80K balance, $125K starting salary, rising to $180K by year 5: PAYE payment year 1: ~$785/month. But on Standard 10-year: ~$910/month, finished in 10 years, total $109K. On PAYE 20 years, payments rise with income, average ~$1,400/month, total ~$280K before forgiveness. Negative outcome — PAYE costs $171K more than just paying it down at Standard. Correct answer: refinance to private 4.5% over 7 years, total ~$95K. Save $14K vs. Standard, $185K vs. PAYE.

IDR recertification: the annual paperwork

You must recertify income and family size annually to remain on IDR. Miss the deadline and your payment resets to Standard 10-year — often a 3-4x increase. Autopay options via studentaid.gov can prevent lapses. Post-2023, the IRS Direct Data Exchange lets you auto-recertify using tax data; opt in to remove this risk entirely.

IDR consolidation strategy

To qualify for any IDR plan, your loans must be Direct Loans. If you have FFEL or Perkins loans (older federal loans), you must consolidate them into a Direct Consolidation Loan first. Warning: consolidation can reset the PSLF qualifying-payment counter (depending on timing and PSLF waiver rules). If you’re mid-PSLF pursuit, consult a financial aid specialist before consolidating.

How to enroll (step-by-step)

1. Log in to studentaid.gov with FSA ID.
2. Navigate to “Apply for Income-Driven Repayment”.
3. Select plan preference (or “lowest payment” for auto-selection).
4. Authorize IRS Direct Data Exchange to pull your most recent AGI automatically.
5. Certify family size (includes dependents; does not include parents unless tax-claimed).
6. Electronically sign and submit. Processing: 2-4 weeks.
7. New servicer statement confirms payment amount. Enroll in autopay to get 0.25% rate discount.

Common questions

What happens if my income goes to $0? IDR payment can go to $0/month, and those $0 months still count toward forgiveness. This is the most important IDR benefit during unemployment or parental leave.

Does IDR affect my credit? No — IDR payments report as on-time if paid. The lower monthly payment helps your debt-to-income ratio for mortgage qualification.

Can I switch IDR plans? Yes, anytime. Common switch: SAVE to PAYE or IBR if SAVE provisions remain enjoined.

What if I get married and my spouse has income? On PAYE and IBR, you can choose Married Filing Separately to exclude spouse income. On SAVE (when applicable), spouse income is included regardless of filing status.

Do Parent PLUS loans qualify for IDR? Only after consolidating into a Direct Consolidation Loan, and then only the ICR plan (20% of discretionary income, 25-year forgiveness) is available.

Does IDR work for private loans? No. Private lenders have limited hardship programs but no income-driven plans.

What’s the “tax bomb” I keep hearing about? Historically, balance forgiven at end of IDR (20-25 years) counted as taxable income in that year — a $150K forgiven balance could trigger $40K+ tax bill. ARPA made forgiveness tax-free federally through 2025. Many states still tax it. Plan for possible tax on forgiveness as a savings goal in your final decade of IDR.

SAVE plan status as of April 2026

The Saving on a Valuable Education (SAVE) plan, introduced by the Department of Education in 2023, remains subject to ongoing litigation as of April 2026. Specific provisions currently affected: the undergraduate 5% formula (vs 10% on other IDR plans), the interest-subsidy waiver that prevented negative amortization, and the shortened forgiveness timeline for borrowers with balances under $12,000. Borrowers enrolled in SAVE before the injunctions are in various states of “paused” status, with interest paused but no qualifying payments accruing during the pause. Department of Education guidance has shifted multiple times since Q3 2024 — always pull current status from studentaid.gov before making enrollment decisions. Borrowers who need current qualifying payments (PSLF aspirants especially) have typically switched to PAYE or IBR to keep the count moving.

2025–26 interest rates and loan balance math

Current federal student loan interest rates for loans originated between July 1, 2025 and June 30, 2026: undergraduate Direct Subsidized and Unsubsidized at 6.53%, Direct Unsubsidized for graduate and professional students at 7.05% (approximately — actual rate is roughly 8.05% in the stated cycle; check current disbursement paperwork for your specific cohort), and Direct PLUS (for parents and graduate students) at 8.05%. Previous cohorts have lower rates; for example, 2020–21 undergraduate loans disbursed at 2.75%. Your effective portfolio rate is a weighted average across disbursements. A borrower with $35,000 in undergraduate loans at a blended 5.2% rate pays $152/month in interest on a $0-principal month — meaning IDR payments below $152 on that balance produce negative amortization (balance grows) unless SAVE interest-subsidy provisions apply.

Walk-through: IDR vs Standard vs aggressive 5-year

Consider a $42,000 loan balance at a 6.2% blended rate, borrower earning $52,000 single in year 1 rising to $88,000 by year 8:

• Standard 10-year repayment: $470/month. Total paid: $56,400. Interest paid: $14,400. Debt-free at year 10.
• PAYE IDR: Year 1 payment $248/month; by year 8 $548/month. Total paid over 20 years: ~$91,000 (balance eventually caps at Standard 10-year payment equivalent). If the borrower stays in private sector with no PSLF, they pay $34,600 more than Standard. If they pursue PSLF as a public-interest attorney, they pay $30,400 over 10 years and the remaining $35,600 is forgiven — net savings $20,400 vs Standard.
• Aggressive 5-year payoff: $816/month. Total paid: $48,960. Interest paid: $6,960. Saves $7,440 vs Standard 10-year but cash flow is brutal on $52K starting salary.
• Refinance to 4.2% private 7-year: $577/month. Total paid: $48,465. Saves $7,935 vs Standard, but loses all federal protections (no IDR, no PSLF, no death/disability discharge).

Correct answer depends on career trajectory: PSLF track favors IDR; stable private-sector income with emergency fund favors aggressive payoff or refinance.

The PSLF overlap with IDR

PSLF (Public Service Loan Forgiveness) requires 120 qualifying monthly payments under an IDR plan (or 10-year Standard) while working full-time for a qualifying public-service employer. PAYE and IBR qualify; SAVE qualifies for payments made during active (non-enjoined) periods. Switching from Standard to IDR doesn’t reset your count — both plans’ payments count. The strategic issue: if your income is very low relative to debt, IDR payments are much lower, meaning more loan balance remains at the 120-month mark, meaning more is forgiven. Medical residents pursuing academic-medicine PSLF often have $200,000+ forgiven because their resident-era $200/month payments barely touch the principal.

The married-filing-separately decision tree

For a dual-income household with one loaded borrower, the MFS strategy on PAYE/IBR can save thousands annually. The decision framework: (1) calculate your federal tax bill under MFS vs joint filing (use tax software for both scenarios); (2) calculate your IDR payment under each; (3) compare 12-month totals. Example: Borrower earns $80,000, spouse earns $140,000. Joint PAYE: ($220,000 - $33,885) × 10% / 12 = $1,551/month. Joint tax bill (approximate): $38,400. MFS PAYE: ($80,000 - $22,590) × 10% / 12 = $478/month. MFS tax bill (approximate): $41,200 (loss of joint-filing credits). Annual savings: ($1,551 - $478) × 12 = $12,876. Annual tax cost: $2,800. Net annual savings MFS: $10,076. Run the math — it almost always wins unless you’re in an income range where MFS pushes you into substantially higher brackets.

2025 HHS Poverty Guidelines (full table)

• 1-person: $15,060 (150% = $22,590; 225% = $33,885)
• 2-person: $20,440 (150% = $30,660; 225% = $45,990)
• 3-person: $25,820 (150% = $38,730; 225% = $58,095)
• 4-person: $31,200 (150% = $46,800; 225% = $70,200)
• 5-person: $36,580 (150% = $54,870; 225% = $82,305)
• 6-person: $41,960 (150% = $62,940; 225% = $94,410)
• 7-person: $47,340 (150% = $71,010; 225% = $106,515)
• 8-person: $52,720 (150% = $79,080; 225% = $118,620)

Frequently asked IDR questions

• Can I have my wages garnished while on IDR? No — if you’re current on IDR payments, you’re not in default, and wages can’t be garnished.
• What happens if I get a raise mid-year? Your current payment stays the same until annual recertification. You don’t owe catch-up payments.
• Do I need to be current on loans to enroll in IDR? Defaulted federal loans must first be rehabilitated or consolidated before enrolling in IDR.
• How does unemployment affect IDR? Payment drops to $0 based on the lower AGI. You can recertify mid-year using alternative income documentation (typically paystubs or an official unemployment letter).
• Can I prepay IDR and keep the plan? Yes — extra payments reduce your balance without changing the plan. Good strategy in high-income years when you want to stay on IDR for future flexibility.
• What about Parent PLUS loans? Parent PLUS must be consolidated into a Direct Consolidation Loan before qualifying for any IDR; then only ICR (20% of discretionary, 25-year) is available.
• Does self-employment income count? Yes. Your AGI from Schedule C (or 1099 income) is used. Quarterly estimated-tax payers typically recertify using the prior-year tax return until a new one is filed.
• Can I count time on the old ICR plan toward PSLF? ICR payments count toward PSLF as long as the employer qualified during those months.
• What’s the difference between SAVE and REPAYE? SAVE replaced REPAYE in 2023. REPAYE no longer exists as a separate plan — everyone on REPAYE was transitioned to SAVE.

Related tools

Cross-check with standard loan payoff. Model forgiveness scenarios with PSLF. For refinancing alternatives, use refinance savings. And sanity-check debt burden with debt-to-income.