1. What is Income-Driven Repayment?

Income-Driven Repayment (IDR) plans cap your monthly student loan payment at a percentage of your discretionary income, typically 10-20%. These plans make payments more manageable and offer loan forgiveness after 20-25 years of qualifying payments.

2. How Does the Calculator Work?

The calculator uses the basic IDR formula:

Where:

• \( Income \) — Your annual income in USD
• \( Percentage \) — The IDR percentage (e.g., 0.10 for 10%)
• \( PMT \) — Your estimated monthly payment (annual calculation divided by 12)

Explanation: The equation calculates your annual payment obligation based on your income and the specific IDR plan's percentage, then divides by 12 for the monthly amount.

3. Importance of Payment Calculation

Details: Understanding your potential IDR payments helps with financial planning, comparing repayment options, and determining if you qualify for lower payments based on your income.

4. Using the Calculator

Tips: Enter your gross annual income in USD and the IDR percentage as a decimal (e.g., 0.15 for 15%). 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 10-15% of discretionary income (e.g., REPAYE/PAYE 10%, IBR 15% for new borrowers).

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 different IDR plans?
A: Yes, including PAYE, REPAYE, IBR, and ICR - each with slightly different rules and percentages.

Q4: Does this calculator account for family size?
A: This basic version doesn't - actual IDR payments consider family size and poverty guidelines.

Q5: How often do I need to recertify income?
A: Annually, as your payment amount may change with income fluctuations.