1. What is Income-Driven Repayment?

Income-Driven Repayment (IDR) plans calculate your monthly student loan payment based on your income and family size. These plans typically cap payments at 10-20% of your discretionary income.

2. How Does the Calculator Work?

The calculator uses the basic IDR formula:

Where:

• \( Income \) — Annual income in USD
• \( percentage \) — IDR percentage as decimal (e.g., 0.10 for 10%)
• \( PMT \) — Monthly payment in USD (annual calculation divided by 12)

Explanation: The equation calculates annual payment as a percentage of income, then divides by 12 for monthly amount.

3. Importance of Payment Calculation

Details: Accurate payment estimation helps borrowers budget effectively and understand their obligations under different repayment plans.

4. Using the Calculator

Tips: Enter your annual income in USD and the IDR percentage as a decimal (10% = 0.10). All values must be valid (income > 0, percentage between 0.01-0.20).

5. Frequently Asked Questions (FAQ)

Q1: What are common IDR percentages?
A: Most plans use 10-20% of discretionary income (e.g., REPAYE 10%, IBR 15%, PAYE 10%).

Q2: How is discretionary income defined?
A: Typically your AGI minus 150% of the poverty guideline for your family size and state.

Q3: Are there payment caps?
A: Some plans cap payments at the 10-year Standard repayment amount regardless of income.

Q4: How often must income be recertified?
A: Annually, though you can recertify more frequently if your income decreases.

Q5: Does this calculator account for family size?
A: This basic version doesn't. For precise calculations, use official loan servicer tools.