Income-Driven Repayment Calculator Formula

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

Use the Income-Driven Repayment Calculator

Formulas Used

Estimated Monthly Payment

monthly_payment = discretionary * plan_pct / 100 / 12

Annual Payment

annual_payment = discretionary * plan_pct / 100

Discretionary Income

discretionary_income = discretionary

150% of Poverty Line

poverty_guideline = 150 / 100 * poverty_line

Variables

VariableDescriptionDefault
agiAdjusted Gross Income(USD)50000
family_sizeFamily Size1
loan_balanceStudent Loan Balance(USD)40000
plan_pctPayment Percentage(%)10
poverty_lineDerived value= 15060 + (family_size - 1) * 5380calculated
discretionaryDerived value= max(agi - 150 / 100 * poverty_line, 0)calculated

How It Works

Income-Driven Repayment Plans

How Payments Are Calculated

Monthly Payment = (AGI - 150% of Poverty Line) x Plan% / 12

Plan Comparison

PlanPaymentForgiveness SAVE (REPAYE)10% discretionary20-25 years IBR15% discretionary25 years ICR20% discretionary25 years

Poverty Guidelines (2024, Continental US)

  • 1 person: $15,060
  • Each additional: +$5,380
  • Discretionary income = AGI minus 150% of the poverty line

    • Worked Example

    $50,000 AGI, single, $40,000 loans, SAVE plan (10%).

    agi = 50000family_size = 1loan_balance = 40000plan_pct = 10
    1. 01Poverty line (1 person) = $15,060
    2. 02150% of poverty = $22,590
    3. 03Discretionary income = $50,000 - $22,590 = $27,410
    4. 04Annual payment = $27,410 x 10% = $2,741
    5. 05Monthly payment = $2,741 / 12 = $228

    Frequently Asked Questions

    Which income-driven plan is best?

    The SAVE plan (formerly REPAYE) typically offers the lowest payments at 10% of discretionary income and has the most generous interest subsidy. It is the best option for most borrowers.

    Is forgiven debt taxable?

    Under current law, PSLF forgiveness is not taxable. For other IDR forgiveness, the forgiven amount may be taxable as income. A temporary provision through 2025 makes all forgiveness tax-free.

    What if my income increases?

    Your payment is recalculated annually based on your latest income. As your income grows, payments increase. You can switch to the standard plan anytime if it becomes cheaper.

    Ready to run the numbers?

    Open Income-Driven Repayment Calculator