1. What is Income-Driven Repayment (IDR)?

Income-Driven Repayment (IDR) plans are federal student loan repayment options that base your monthly payment 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 gross income in USD
• \( Percentage \) — IDR percentage (typically 0.10 for 10% or 0.20 for 20%)
• \( PMT \) — Monthly payment amount in USD

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

3. Importance of IDR Calculation

Details: Calculating potential IDR payments helps borrowers understand affordability, compare repayment plans, and plan their finances.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What are the different IDR plans available?
A: Common plans include REPAYE (10%), PAYE (10%), IBR (10-15%), and ICR (20%).

Q2: How is discretionary income calculated for IDR?
A: Actual IDR plans subtract 150% of poverty guidelines from income before applying percentage.

Q3: Are IDR payments recalculated annually?
A: Yes, payments are recalculated each year based on updated income and family size.

Q4: What happens to remaining balance after repayment period?
A: Most IDR plans forgive remaining balance after 20-25 years of qualifying payments.

Q5: Are all federal loans eligible for IDR?
A: Most federal student loans qualify, but private loans and some older federal loans may not.