Income-Driven Repayment (IDR) Payment Estimator

Understanding Income-Driven Repayment Plans

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Income-Driven Repayment (IDR) plans cap your monthly federal student loan payment at a percentage of your discretionary income — the difference between your adjusted gross income and 150-225% of the federal poverty guideline for your family size. After 20-25 years of qualifying payments, any remaining balance is forgiven.

There are four IDR plans available in 2026, each with different payment formulas and forgiveness timelines:

SAVE (Saving on a Valuable Education): The newest and most generous plan. Payments are 5% of discretionary income for undergraduate loans, 10% for graduate loans, with a 225% poverty guideline threshold. Forgiveness after 20-25 years. Unpaid interest does not capitalize. This is the best option for most borrowers.

PAYE (Pay As You Earn): 10% of discretionary income using the 150% poverty threshold. Payments capped at the standard 10-year amount. Forgiveness after 20 years. Available only to borrowers who received loans after October 2007.

IBR (Income-Based Repayment): 10% (new borrowers) or 15% (older borrowers) of discretionary income. Forgiveness after 20 or 25 years depending on borrower date.

ICR (Income-Contingent Repayment): 20% of discretionary income or what you would pay on a 12-year fixed plan, whichever is less. Forgiveness after 25 years. The only IDR plan available for Parent PLUS loans (through consolidation).

How Discretionary Income Is Calculated

Your payment under any IDR plan is based on discretionary income, which is your Adjusted Gross Income (AGI) minus a poverty guideline threshold. Under the SAVE plan, the threshold is 225% of the poverty guideline — significantly more generous than the 150% used by older plans.

For 2026, the federal poverty guideline for a single person is approximately $15,060. Under SAVE, 225% = $33,885. If your AGI is $50,000, your discretionary income is $50,000 - $33,885 = $16,115. At 5% (undergrad), your annual payment is $806, or about $67/month. Under older plans at 150% ($22,590 threshold), the same income produces $274/month — four times higher.

Family size dramatically affects payments. Each additional family member raises the poverty threshold by approximately $5,380 (225% under SAVE), reducing your discretionary income and monthly payment. Married borrowers filing separately can exclude their spouse's income, though this sacrifices other tax benefits.

IDR Forgiveness: What You Need to Know

After 20-25 years of qualifying payments (depending on the plan and loan type), your remaining balance is forgiven. However, there is a critical tax consideration: forgiven debt may be taxable as income. Under current law, IDR forgiveness is tax-exempt through 2025. Congress may extend this, but without action, forgiveness after 2025 could trigger a significant tax bill.

Example: If $80,000 is forgiven and you are in the 22% bracket, the tax bill would be approximately $17,600. This is still far less than repaying the full $80,000, but borrowers should plan for this possibility by building a tax reserve fund in the years leading to forgiveness.

PSLF is different: Forgiveness under Public Service Loan Forgiveness is always tax-free, regardless of when it occurs. If you work in public service, PSLF (120 payments) is almost always superior to standard IDR forgiveness (240-300 payments).

Choosing the Right IDR Plan

SAVE is the best choice for most borrowers — lowest payments, no interest capitalization, and the most generous poverty threshold. The only situations where another plan might be better: if your SAVE payment exceeds the PAYE cap (which mirrors the standard 10-year payment), PAYE may produce lower payments for higher earners.

Recertify your income annually. If you miss the deadline, your payment reverts to the standard amount and unpaid interest capitalizes (except under SAVE). Set a calendar reminder 30 days before your recertification date.

Frequently Asked Questions