Standard repayment vs. income-driven repayment
Federal student loans default to a standard 10-year plan: fixed, level payments that clear the debt fastest and cost the least interest. Income-driven repayment (IDR) plans take a different tack — they cap your monthly payment at a slice of your discretionary income, which is usually far lower, but stretch repayment out over 20–25 years. This calculator shows both side by side so you can see exactly what the lower payment costs you over time.
Discretionary income
Discretionary income = AGI − 1.5 × poverty line
where the 2025 contiguous-US poverty line is$15,060 + $5,380 × (household size − 1). Your income-driven payment is that discretionary income times your plan’s percentage (commonly 10%), divided by 12.
What makes this calculator different
- Income-driven estimate, not just amortization. Most student-loan calculators only show the standard payment. This one estimates your IDR payment from your AGI and household size.
- The trade-off, made explicit. A side-by-side comparison of monthly payment, total interest, and payoff time so the cost of a lower payment is never hidden.
- Negative-amortization warning. If your IDR payment can’t cover the monthly interest, we flag it and estimate the balance remaining at the forgiveness horizon — which may be forgiven, but taxable.
- Full standard schedule. The complete year-by-year amortization for the standard plan, exportable to CSV.
Frequently asked questions
What’s the difference between the standard and income-driven repayment plans?+
The standard plan pays off your federal student loans in fixed, level instalments over a set term — 10 years by default — so you clear the debt fastest and pay the least interest. An income-driven repayment (IDR) plan instead caps your monthly payment at a percentage of your discretionary income, which is usually much lower, but stretches repayment to 20–25 years. Lower payments ease monthly cash flow, but the longer term means you pay more interest overall — and any balance left at the end may be forgiven.
What is discretionary income and how is it calculated?+
For income-driven repayment, discretionary income is your adjusted gross income (AGI) minus 150% of the federal poverty guideline for your household size. This calculator uses the 2025 contiguous-US guideline: $15,060 for a household of one, plus $5,380 for each additional person. Your income-driven payment is then a percentage (commonly 10%) of that discretionary income, divided by 12. If your income is low relative to your household size, discretionary income — and therefore your payment — can be zero.
What is loan forgiveness and the “tax bomb”?+
On most income-driven plans, any balance still owed after the 20–25 year repayment period is forgiven. The catch is that, outside of special programs and temporary federal relief, the forgiven amount has historically been treated as taxable income in the year it’s forgiven — a one-time tax bill sometimes called the “tax bomb.” If your payment doesn’t even cover the monthly interest, your balance can grow (negative amortization), making an eventual forgiven balance — and its potential tax — larger.
Should I refinance federal loans into a private loan?+
Refinancing with a private lender can lower your interest rate, but it permanently converts federal loans into private debt — you lose access to income-driven repayment, federal forgiveness programs, generous deferment and forbearance, and federal interest pauses. Refinancing can make sense if you have a stable income, strong credit, and no intention of using those federal protections. If you might need income-driven repayment or forgiveness, keeping loans federal is usually the safer choice.
Should I pay extra on my student loans?+
If your loans have no prepayment penalty (federal loans don’t), extra payments go straight to principal and remove the future interest that principal would have accrued, shortening the term. Paying extra makes the most sense when your rate is high and you’re committed to the standard plan. If you’re pursuing income-driven repayment with an eye toward forgiveness, extra payments may simply reduce a balance that would have been forgiven — weigh that trade-off carefully.
Disclaimer: These are simplified estimates for educational purposes only. Actual federal income-driven repayment rules, plan percentages, forgiveness terms, tax treatment, and the federal poverty guidelines change over time and depend on your specific loans and circumstances. This is not financial, tax, or lending advice.