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IDR Payment Formula:
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The Income-Driven Repayment (IDR) plan payment calculation determines your monthly student loan payment based on a percentage of your discretionary income. This makes payments more affordable by tying them to your income level.
The calculator uses the IDR payment formula:
Where:
Explanation: The equation calculates your annual payment obligation and then divides by 12 to get the monthly amount.
Details: Understanding your potential IDR payments helps in financial planning and deciding which repayment plan best fits your financial situation. IDR plans can provide payment relief and potential loan forgiveness after 20-25 years.
Tips: Enter your gross annual income in USD and the IDR percentage as a decimal (e.g., 0.10 for 10%). Typical IDR percentages range from 10% to 20% of discretionary income.
Q1: What are the different IDR plans available?
A: Common IDR plans include Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR), each with slightly different terms.
Q2: How is discretionary income defined?
A: Discretionary income is typically your adjusted gross income (AGI) minus 150% of the poverty guideline for your family size and state.
Q3: Are there income requirements for IDR plans?
A: Some plans like PAYE require you to have a partial financial hardship, while others like REPAYE are available regardless of income level.
Q4: How often do I need to recertify my income?
A: You must recertify your income and family size annually to remain on an IDR plan.
Q5: Does this calculator account for family size?
A: This basic calculator doesn't account for family size or poverty guidelines. For precise calculations, use the official loan simulator at StudentAid.gov.