Income-Based Repayment Plan Calculator
Income-Contingent Repayment (ICR)
Income-Driven Repayment (IDR) – PAYE/SAVE (10% of Discretionary Income)
Income-Driven Repayment (IDR) – IBR (15% of Discretionary Income, older plans)
Estimated Monthly Payment:
$0.00
Understanding Income-Based Repayment (IBR) Plans
Income-Based Repayment (IBR) plans are designed to make student loan payments more manageable by tying your monthly payment amount to your income and family size. This can be a crucial tool for borrowers who struggle with high loan balances relative to their earnings, offering potential loan forgiveness after a certain period of qualifying payments.
How Income-Based Repayment Works
The core principle of IBR is that your discretionary income determines your monthly payment. Discretionary income is generally calculated as the difference between your Adjusted Gross Income (AGI) and 150% of the poverty guideline for your family size. Different plans have varying percentages applied to this discretionary income and different forgiveness timelines.
Key Terms:
- Total Federal Student Loan Balance: The total amount you owe on all your federal student loans.
- Adjusted Gross Income (AGI): Your gross income minus certain deductions, as reported on your federal tax return.
- Family Size: The number of people in your household, including yourself.
- Poverty Guideline: An annual dollar amount determined by the U.S. Department of Health and Human Services, which varies based on family size and state (for Alaska and Hawaii). For simplicity, this calculator uses a national average figure.
- Discretionary Income: The amount of your income that is considered "available" for loan payments. It's typically calculated as:
Your AGI - (1.5 * Poverty Guideline for your Family Size)
Repayment Plan Variations:
- Income-Contingent Repayment (ICR): The only IBR plan available for Parent PLUS loans that have been consolidated into a Direct Consolidation Loan. Payments are capped at 20% of discretionary income or the amount you'd pay on a 12-year fixed-payment plan, whichever is less.
- Income-Based Repayment (IBR): Available for most federal student loans. Payments are capped at 10% or 15% of discretionary income, depending on when you received your first loan.
- Pay As You Earn (PAYE): Available for most federal student loans. Payments are capped at 10% of discretionary income.
- Saving on a Valuable Education (SAVE) Plan: Replaced REPAYE. Payments are generally capped at 5-10% of discretionary income, with interest subsidies and other benefits. This calculator simplifies by grouping PAYE and SAVE into a 10% tier for estimation.
Calculator Logic Explained:
This calculator estimates your monthly payment based on the following general steps:
- It retrieves your loan balance, AGI, family size, and selected plan.
- It determines the relevant Federal Poverty Guideline based on family size. (Note: This calculator uses a simplified, representative poverty guideline for demonstration purposes. Actual figures may vary slightly based on the official HHS poverty guidelines for the current year and your state).
- It calculates your discretionary income:
AGI - (1.5 * Poverty Guideline). If this results in a negative number (meaning your income is below 150% of the poverty guideline), your discretionary income is considered $0, and your payment will be $0. - It applies the percentage for the selected repayment plan to your discretionary income.
- The calculated monthly payment is the lesser of:
- The percentage of discretionary income (e.g., 10%, 15%, 20%).
- The amount you would pay on a standard 10-year repayment plan (This is a simplification; actual IBR plans have different caps and calculation bases).
- The minimum payment is typically $0.
Disclaimer: This calculator provides an estimate only. Your actual payment may differ based on specific loan types, official poverty guidelines for your state, and the specific terms of your loan servicer's offerings. Always consult your loan servicer for precise calculations and enrollment information.