Income-Driven Repayment vs the Standard Plan: What's the Difference?
Income-Driven Repayment (IDR) plans, such as SAVE, PAYE, and IBR, calculate your federal student loan payment as a percentage of your discretionary income, the amount your income exceeds a poverty-line-based threshold, rather than a fixed amortization schedule. If your income is below that threshold, your payment can drop to $0. The Standard Repayment Plan, on the other hand, sets a fixed monthly payment from day one based on your loan amount, interest rate, and a 10-year term, regardless of what you earn. While you're job hunting or working an entry-level role with modest pay, IDR keeps your payments manageable, but once your income climbs, the Standard plan is often cheaper in total interest since you pay off the balance faster. This calculator lines up the monthly payment under both approaches side by side. Keep in mind that unpaid interest under IDR can capitalize onto your balance over time on some plans, so it's worth checking the specific terms of the plan you're considering, and switching between repayment plans later is usually possible but can affect how your progress toward loan forgiveness is counted.
How It's Calculated
| Plan | Formula |
|---|---|
| Standard Plan | Standard fixed-payment amortization formula |
| Income-Driven Repayment | (Annual Income - Discretionary Income Threshold) ร 10% รท 12 |
Frequently Asked Questions
Yes, if your income is at or below the threshold, your calculated payment can be $0 per month, though interest still accrues.
If you expect high income right after graduation, the Standard plan is usually cheaper overall in total interest paid.
It's based on the federal poverty guideline, updated annually, so check studentaid.gov for the exact current figure.
โป The discretionary income threshold and IDR percentage change by plan and year, so treat this as a rough estimate; verify exact figures at studentaid.gov.