The payment tracks your income, not your balance
An income-driven plan ignores how much you owe when setting the monthly bill. It takes your adjusted gross income, subtracts a protected amount tied to the federal poverty guideline for your family size, and charges a percentage of what is left. Owe $30,000 or $300,000 and the payment is the same if the income is the same. Whatever survives after a set number of years of qualifying payments is forgiven.
That design is most valuable when the balance dwarfs the income. A borrower with $80,000 in loans on a $45,000 salary gets an immediately manageable payment and a realistic endpoint. It runs the other way for light debt: with $30,000 owed on a $75,000 income, the income-driven payment often lands near the standard amount anyway, and stretching the loan out just adds years of interest. One more boundary worth knowing before you commit: refinancing with a private lender ends income-driven eligibility permanently.
A note on which plans you can actually get
The four formulas this tool compares (SAVE, PAYE, IBR, and ICR) were the federal lineup as of 2024. Since then, court rulings froze parts of SAVE and legislation passed in 2025 began restructuring the entire menu, with new plans phasing in and several older ones closing to new enrollment over a period of years. The formulas remain worth understanding because they show how income-driven math works, and millions of existing borrowers are still repaying under them. But do not pick a career or refinancing strategy around a specific plan without first confirming on the repayment plans page at studentaid.gov that the plan is open to you. This page describes mechanics; that page describes current law.
How the four formulas differ
They share a skeleton and differ in two numbers: how much income is sheltered and what percentage applies above it. SAVE shelters 225% of the poverty guideline, the most generous threshold, and this tool models it at 10% of discretionary income. (SAVE was designed to drop to 5% for undergraduate debt, but that piece was among those blocked in court, so the calculator uses the 10% figure.) PAYE shelters 150% and charges 10%, with the payment capped at the standard 10-year amount. New IBR matches PAYE for loans first taken after July 2014; older IBR borrowers pay 15%. ICR is the expensive one at 20% of discretionary income, or a 12-year fixed payment if that is lower, and it has mattered mainly as the single income-tied option for consolidated Parent PLUS debt.
- SAVE, as modeled: income above 225% of the poverty guideline, charged at 10%.
- PAYE and new IBR: income above 150% of the guideline, charged at 10%, capped at the standard 10-year payment.
- Older IBR (loans before July 2014): same 150% threshold, charged at 15%.
- ICR: 20% of discretionary income or a 12-year fixed payment, whichever is lower.
The same borrower under every formula
Numbers make the differences concrete. Take a single borrower earning $50,000 with $40,000 in loans at 5.5%, using the 2024 poverty guideline of $15,060. The SAVE formula shelters $33,885, leaving $16,115 of discretionary income and a payment near $134. PAYE and new IBR shelter $22,590, leaving $27,410 and a payment around $228. ICR would charge $457 on the percentage test, but its 12-year cap brings the payment to about $380. The standard 10-year plan, for comparison, runs $434. The spread between the cheapest and most expensive income-driven formula for this one borrower is almost $250 a month, which is the whole reason plan choice deserves more attention than most borrowers give it.
| Formula | Income sheltered | Share charged | Monthly payment |
|---|---|---|---|
| SAVE (as modeled) | $33,885 | 10% | $134 |
| PAYE / new IBR | $22,590 | 10% | $228 |
| ICR | $22,590 | 20%, capped at 12-year fixed | $380 |
| Standard 10-year | n/a | n/a | $434 |
Single borrower, $50,000 income, $40,000 balance at 5.5%, 2024 poverty guidelines, as modeled by this calculator
Small payments mean the balance can grow
When the formula produces a payment below the monthly interest charge, the shortfall accrues. On $50,000 at 5.5%, interest runs about $229 a month; a borrower paying $134 falls $95 short every month. Some plans absorbed part or all of that unpaid interest, SAVE most aggressively, and how much gets absorbed under current rules is one of the details that has changed with the litigation and the new law. The practical takeaway is stable even when the rules are not: on an income-driven plan, a flat or rising balance is normal and is not by itself a sign something is wrong. The plan's promise is the endpoint, not steady progress along the way. Anyone uncomfortable watching a balance climb for years should run the loan simulator at studentaid.gov and compare the income-driven path against simply paying the standard amount.
Recertification is where borrowers slip
You recertify income and family size every year, and missing the deadline is the most expensive routine mistake in the system. The payment typically reverts toward the standard amount and unpaid interest can capitalize. A calendar reminder a month ahead of the date costs nothing. Public service borrowers have a second annual chore: filing the PSLF employment certification form. It is technically optional, but borrowers have discovered at year eight that an employer never qualified, and an annual filing surfaces that problem at year one instead. Finally, if your payment is $0, confirm your servicer recorded it as a scheduled income-driven payment rather than placing you in forbearance. The two look identical on your bank statement and are treated very differently by the forgiveness count.