Income-driven repayment (IDR) plans set your monthly student loan payment at an amount that’s deemed affordable based on your income and family size.
Most online income-based repayment calculators either provide an incorrect estimate of your monthly payment, or they haven’t been updated in several years for 2020 poverty line numbers. Enjoy our IBR calculator!
Federal IBR Calculator for 2020
What is your family size? Enter the total number of people in your family including you, your spouse, and your children. Include unborn children who will be born this year.
List the smaller of your prior tax year adjusted gross income (AGI) or your current income. Enter your adjusted gross income (AGI). You can find your AGI on your IRS Form 1040, line 8b. If you don't have this handy, you may use an estimate.
How much federal student debt do you owe? Input the current balance of all of your federal student loans.
What's the average interest rate of all of your federal student loan debt? Enter the weighted average interest rate of all of your current federal student loans.
Are you legally married?
Are you filing taxes separately? If married, you have the option of filing taxes as "Married Filing Jointly" or "Married Filing Separately."
List the smaller of your spouse's prior tax year AGI or their current income You can find your AGI on IRS Form 1040, line 8b. If you don't have this handy, you may use an estimate.
How much federal student debt does your spouse owe? Input the current balance of all of your spouse's federal student loans.
|REPAYE||PAYE / New IBR||Old IBR||Standard
at 4.00% Monthly payment if the loan is refinanced at 4.00% APR for a 10-year term.
|Your Monthly Payment||$375||$375||$562||$2,220||$2,025|
|Spouse's Monthly Payment||$187||$187||$281||$1,110||$1,012|
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 plans offered by the Department of Education.
In addition to Income-Based Repayment (IBR), the other IDR plans include:
- Revised Pay As You Earn Repayment Plan (REPAYE)
- Pay As You Earn Repayment Plan (PAYE)
- Income-Contingent Repayment Plan (ICR)
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.
IBR 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.
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.
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.
When is IBR Not a Good Idea?
Here’s a couple 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 Earnest would show how much in interest savings you could qualify for (and you get a refinancing bonus of up to $500 if you end up using them).
Income-Based 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.
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 10-Year Standard 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.