Income-Based Repayment Calculator (IDR Plans, Updated for 2024)

Learn More About Income-Based Repayment

While the terms “Income-Based Repayment” and “Income-Driven Repayment” are often used interchangeably, Income-Based Repayment is technically one of several Income-Driven Repayment (IDR) plans offered by the Department of Education.

If you want to check out the far more detailed version of the calculator above, check out the full version of our IDR student loan forgiveness calculator.

In addition to Income-Based Repayment (IBR), the other IDR plans include:

• The Old Revised Pay As You Earn Repayment Plan (REPAYE)
• Pay As You Earn Repayment Plan (PAYE)
• Income-Contingent Repayment Plan (ICR)
• New Revised Pay As You Earn, also known as Saving on a Valuable Education (SAVE)

The ICR plan is generally unhelpful as it requires 20% of your income.

The new IBR plan is virtually identical to the PAYE plan.

That's why we model the 3 most commonly used plans above with our income driven repayment calculator.

Be Aware of Key Dates for IDR Plans in 2024-2025

It's not enough to know what the cheapest plan is. You also need to know what benefits arrive when.

On July 30, 2023, the New REPAYE / SAVE Plan provisions arrived, which allow the following:

• Deducting 225% of the poverty line instead of 150% before paying anything
• Excluding your spouse's income from your payment if you filed your most recent tax return as “married filing separate”
• Receiving a 100% subsidy of all interest that your required REPAYE / SAVE payment doesn't cover

However, these benefits are currently on pause due to court actions.

What Benefits Arrive July 2024

The other provisions of the New IDR regulations were supposed to happen by July 1, 2024. These included:

• Paying 5% of discretionary income on undergraduate loans and 10% on graduate loans
• No longer being able to enroll in PAYE or ICR

The Department of Education cannot implement these terms either due to court actions at this time.

What Happens with IBR and IDR In 2025 and Beyond

Depending on court rulings, we might return to the pre-pandemic options for income driven repayment. We have to wait and see though.

November 2024 IDR recertification dates have been pushed to November 2025, which we deduced from client screenshots. Borrowers should pay attention to their recertification dates closely as they could possibly be extended yet again.

Why SAVE is Not Best for Everyone

While both New REPAYE and the PAYE plan allow you to file taxes separately and exclude a spouse's income from your calculated payment, the PAYE plan is 20 years for graduate degree holders while New REPAYE is 25 years if you have a grad degree.

Additionally, your IDR payment might be based on 2018 or 2019 tax returns and might not need to be recertified until 2024 or even 2025. So just because the IDR calculator shows one plan as the cheapest, you need to know when and if you should switch when payments begin again after the student loan pause ends.

That's why if you owe a significant student loan balance, you might want to invest some of the money you're saving from the national student loan forbearance in getting a customized student loan plan from one of our CFP® and CFA student loan experts.

How Does the New IDR Plan Work?

The existing REPAYE plan requires payments for 20 years for undergrads and 25 years for grad degree holders. The payment percentage is 10% of discretionary income, defined as your prior year AGI minus 150% of the poverty line.

The New REPAYE / SAVE plan will keep the same forgiveness timeline, except for those with very small amounts of student loans, where it could be as short as 10 years.

The big difference is in how the payment is calculated. Borrowers will need to pay between 5% and 10% of discretionary income, weighted by the percent of your loans from grad school (all undergrad pays 5% while all grad pays 10%). Discretionary income is now prior year AGI minus 225% of the poverty line, which is a much bigger deduction.

In addition, under New REPAYE, you can file taxes separately and exclude your spouse's income from the payment, which means many borrowers should consider filing as “married filing separately” for tax year 2023.

How does IBR work?

IBR is generally a percentage of your discretionary income. That percentage varies by repayment plan:

• 10% of your discretionary income if you borrowed on or after July 1, 2014
• 15% of your discretionary income if you did not borrow on or after July 1, 2014

It's never more than the 10-year Standard Repayment Plan amount.

Additionally, the IBR period is 20 years for new borrowers on or after July 1, 2014, and 25 years for existing borrowers that borrowed prior to July 1, 2014. Any remaining loan balance is forgiven if your federal student loans are not repaid in full at the end of the repayment period.

Again, note that IDR is the broad category of income driven repayment plans, of which IBR is one option. The others are REPAYE, PAYE, and ICR.

REPAYE has a forgiveness timeline of 20 to 25 years. PAYE is 20 years for everyone, and ICR is 25 years for everyone.

IDR plan eligibility

To qualify for IBR, your required payment under the plan must be less than what you’d pay under the Standard Repayment Plan with a 10-year repayment period. If the amount you’d pay under an IBR plan exceeds what you’d pay under the 10-year Standard Repayment Plan, there’s no benefit to having a monthly income-based payment. PAYE has the same restriction.

Borrowers typically meet the IBR eligibility requirement if their monthly payment is more than their annual discretionary income or makes up a significant portion of their annual income.

Note that the New REPAYE plan will be open to all borrowers with Direct Loans, except for Parent PLUS borrowers.

When is IDR Not a Good Idea?

Here are a couple of criteria to know if an income-based repayment plan is not in your best interest:

• Your payment under IBR, PAYE, and REPAYE is close to what it is under the Standard 10 Year Plan
• You work in the private sector
• Your have adequate savings and do not feel stressed making your monthly student loan payment

If you answered yes to all three of those criteria, then you're likely better off refinancing your student loans to a lower interest rate so you can pay them off quickly.

A quick rate check with a lender like Splash Financial would show how much in interest savings you could qualify for (and you get a refinancing bonus of up to $1,000 if you end up using them).

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IBR federal student loans

You can repay the following federal student loans under the IBR plan:

• Direct subsidized loans
• Direct unsubsidized loans
• Direct PLUS Loans made to graduate or professional students
• Direct Consolidation Loans that did not repay any PLUS loans made to parents
• Subsidized Federal Stafford Loans
• Unsubsidized Federal Stafford Loans
• FFEL PLUS Loans made to graduate or professional students
• FFEL Consolidation Loans that did not repay any PLUS loans made to parents
• Federal Perkins Loans (if consolidated)

How can IBR work in my favor?

The goal of an IBR plan is to help keep your monthly student loan payment low. If you anticipate earning a lower salary, especially in the beginning of your career, an IBR plan could be beneficial.

Remember, your IBR payment would be somewhere between 10% (if you’re a new borrower) to 15% of your discretionary income, divided into 12 monthly installments. So, 10% to 15% of a lower salary should keep your student loan payment manageable.

Plus, any part of your balance that’s unpaid after 20 to 25 years will be forgiven. There are two important caveats to consider with any income-driven repayment plan:

• The longer it takes you to repay your student loan, the more interest you’ll pay over time.
• You might be required to pay income tax on the amount of your federal student loan that’s forgiven at the end of your repayment period.

If you’re comfortable trading increased interest for a lower monthly student loan payment, an income driven repayment plan, including IBR, might be the perfect solution for you.

Income Driven Repayment Calculator FAQs

1. How do I apply for an income-driven repayment plan such as IBR?

You will have to submit an application — the Income-Driven Repayment Plan Request — either online or in paper form. Your federal student loan servicer can provide you with this form. The application lets you pick an income-driven repayment plan by name, such as IBR, or allows your loan servicer to determine which plans you’re eligible for.

The simplest way is to go to studentaid.gov/idr and apply there.

You can also permit your servicer to put you on the plan with the lowest monthly payment. You will have to provide your income information when you apply to help determine your eligibility for an IBR plan and calculate your monthly payment amount.

You can wind up on an IBR plan in a couple of ways:

• You requested IBR specifically on your application (and qualified for this plan)
• Your federal student loan servicer requested you be put on the plan that would give you the lowest possible payment, and IBR was it.

Your eligibility for an IBR plan will be determined after you submit your application and your financial information is reviewed.

2. How is my monthly income-based payment amount calculated?

All of the income-driven repayment plans will be based on your discretionary income. The percentage will vary depending on which plan you use to pay your loan.

Under the IBR plan, for example, your monthly payment is generally 10% of your discretionary income if you’re a new borrower on or after July 1, 2014, but it won’t exceed the 10-Year Standard Repayment Plan amount. If you’re not a new borrower on or after July 1, 2014, your monthly payment under the IBR play is generally 15% of your discretionary income — but again not more than the Standard 10-Year Repayment Plan amount.

3. What does “after 20 to 25 years of qualifying repayment” mean?

You will qualify for student loan forgiveness of your remaining balance after you’ve made the equivalent of 20 to 25 years’ worth of qualifying monthly payments. This generally applies to all income-driven repayment plans, including IBR. At least 20 or 25 years had to have passed as well. Qualifying monthly payments for income-driven repayment plans are defined as a payment made under:

• Any income-driven repayment plan, whether based on your income or the 10-year Standard Repayment Plan amount;
• The 10-Year Standard Repayment Plan; or
• Any other repayment plan, if the payment amount is at least equal to what the payment amount would be under the 10-Year Standard Repayment Plan.

4. Will my monthly payment stay the same under an IBR plan?

No. Under the IBR plan, your monthly payment is based on your income and family size when you begin to make payments, as well as any time your income is low enough that your monthly payment would be less than what you’d pay under the 10-Year Standard Repayment Plan.

If your income increases to the point where your monthly payment would exceed what you’d pay under the 10-Year Standard Repayment Plan, however, you can remain on IBR, but your payment would not be based on your income anymore. Your payment would instead be the amount you’d pay under the 10-Year Standard Repayment plan.

5. How do I know if IBR is the right plan for me?

Once you’ve determined that an income-driven plan is the best fit for you, find the plan that offers the most benefits based on your circumstances. All four of the income-driven plans let you make payments based on your income, but they vary in terms of qualification, the monthly payment amount, repayment period length and which loans can be repaid under each one.

If your payment under an IBR plan (based on your income and family size) would be less than what you’d pay under the Standard Repayment Plan with a 10-year repayment period, then IBR could be a good fit for you. IBR is also a good option if your federal student loan debt exceeds your annual discretionary income or makes up a big part of your annual income.

6. When Can I Sign Up for the New REPAYE / SAVE plan above?

You can signup for REPAYE right now. The government plans to amend the terms of the existing REPAYE plan rather than create a new one.

Keep in mind borrowers will get cut off from PAYE when the New REPAYE regulations take effect in July 2024. This is most impactful to borrowers who took out there first loan between October 2007 and June 2014. Borrowers who took out their first loan after July 2014 can sign up for New IBR after this date.

If you want a team of experts to guide you through your student loans, we can help.

If you want a far more powerful copy of the IBR calculator above, enter your name and email below and we'll send you over a copy you can download and use.