July 11, 2026•By FinCompute Team
Understanding Student Loan IDR: How SAVE, PAYE, and IBR Work
#student loans#IDR#SAVE
Federal student loan repayment can feel overwhelming, but government safety nets exist in the form of Income-Driven Repayment (IDR) plans.
Instead of demanding a fixed payment that exceeds your budget, these plans cap your monthly payments at a percentage of your discretionary income.
1. What is Discretionary Income?
To determine what you can realistically afford, the government subtracts a benchmark of the poverty line from your income. The money left over is your discretionary income, and your payment is calculated strictly as a percentage of that figure.
2. Key Plan Comparison
- The SAVE Plan: Protects up to 225% of the poverty line and caps payments at 5% to 10% of discretionary income, waiving unpaid accumulated interest.
- PAYE Plan: Protects 150% of the poverty line, caps payments at 10%, with forgiveness after 20 years.
- IBR Plan: Caps payments at 10% or 15% with forgiveness after 20 to 25 years.
Test your exact repayment schedule with our Student Loan IDR Calculator!