Income-Based Repayment Calculator Formula

Understand the math behind the income-based repayment calculator. Each variable explained with a worked example.

Use the Income-Based Repayment Calculator

Formulas Used

Monthly IBR Payment

monthly_payment = round(discretionary * ibr_pct / 100 / 12)

Annual Payment

annual_payment = round(discretionary * ibr_pct / 100)

Discretionary Income

discretionary_income = discretionary

Variables

VariableDescriptionDefault
annual_incomeAnnual Gross Income ($)45000
family_sizeFamily Size1
poverty_guidelinePoverty Guideline ($)15060
ibr_pctIBR Percentage (%)10
poverty_for_familyDerived value= poverty_guideline + (family_size - 1) * 5380calculated
discretionaryDerived value= max(0, annual_income - 1.5 * poverty_for_family)calculated

How It Works

How Income-Based Repayment Works

IBR caps payments at a percentage of your discretionary income.

Formula

Monthly Payment = (Discretionary Income x IBR%) / 12

Where Discretionary Income = AGI - 150% of Poverty Guideline for your family size.

  • New borrowers (after 2014): 10% of discretionary income
  • Older borrowers: 15% of discretionary income

    • Worked Example

    Single borrower earning $45,000 with 10% IBR rate.

    annual_income = 45000family_size = 1poverty_guideline = 15060ibr_pct = 10
    1. 01Poverty guideline for family of 1 = $15,060
    2. 02150% of poverty = $15,060 x 1.5 = $22,590
    3. 03Discretionary income = $45,000 - $22,590 = $22,410
    4. 04Monthly payment = round($22,410 x 10% / 12) = round($187) = $187

    Ready to run the numbers?

    Open Income-Based Repayment Calculator