Income-Based Repayment Calculator

Income-Based Repayment (IBR) is a repayment plan available to federal student loan borrowers. It’s based on the idea that how much you pay each month should be based on your ability to pay, not how much you owe. When applying for IBR, the government looks at your income, family size, and state of residence to calculate your monthly payments.

How does income-based repayment work?

The income-based repayment (IBR) plan adjusts your monthly student loan payments based on your income, family size and other factors. If you’re struggling with high student loan bills, IBR could bring the financial relief you need.

IBR sets your payments differently depending on when you borrowed. If you were a new borrower on or after July 1, 2014, your payments on IBR would equal 10% of your discretionary income. If you borrowed earlier, your payments would equal 15%.

Along with adjusting your payments, IBR also extends your repayment term to 20 years for new borrowers and 25 years for pre-July 1, 2014 borrowers. If you still have a balance after the new loan term ends, it could be forgiven. Note that any balance forgiven through IBR is considered taxable income.

You’re eligible for IBR if the payments are less than what you’d pay on the standard 10-year plan. You also must hold a qualifying federal student loan.

What type of loans are eligible for income-based repayment?

Most federal student loans qualify for IBR, with the exception of loans made to parents. The following loans could be eligible for IBR:

  • Direct subsidized loans
  • Direct unsubsidized loans
  • Direct PLUS loans made to graduate or professional students
  • Direct consolidation loans that didn’t include Parent PLUS loans
  • Subsidized federal Stafford loans from the FFEL program
  • Unsubsidized federal Stafford loans from the FFEL program
  • FFEL PLUS loans made to graduate or professional students
  • FFEL consolidation loans that didn’t include loans made to parents
  • Federal Perkins loans, if consolidated first

These loans are not eligible for IBR:

  • Direct PLUS loans made to parents
  • Direct consolidation loans that included Parent PLUS loans
  • FFEL PLUS Loans made to parents
  • FFEL Consolidation Loans that repaid PLUS loans made to parents

Note that private student loans do not qualify for federal repayment plans, such as IBR. if you’re having trouble repaying a private student loan, speak with your loan servicer about your options.

How does this income-based repayment calculator work?

This calculator reveals what your monthly payments would be if you put your student loans on IBR. It also compares your loans on IBR with your loans on the standard 10-year plan, so you can see how your monthly payments, loan term and overall balance would change.

The calculator makes a few assumptions, which might not apply to every borrower. First, it assumes your family size will stay the same over the life of your loan. If your family grows, your student loan payment would be adjusted to reflect that.

Second, it assumes an annual income growth of 3.5%, but you can adjust this figure if it doesn’t match your circumstances. Finally, it assumes your loans are unsubsidized and accruing interest from the date of disbursement. If you have subsidized loans, they will not accrue interest during periods of deferment.

Is income-based repayment right for me?

IBR can be a great option for borrowers who are looking to lower their monthly payments. Putting your loans on IBR could make your bills manageable and help you avoid default.

But the downside to IBR is that you’ll be in debt for a lot longer. As a result, you’ll pay more interest over the life of your loan.

Of course, you could get loan forgiveness eventually if you still have a balance after 20 or 25 years. But in that case, you might also have to pay taxes on this forgiven amount before you can completely say goodbye to your student loans.

If you’re considering IBR, crunch the numbers with this IBR calculator to see how it compares with the standard 10-year plan. And make sure to explore every option for repayment, including other income-driven repayment plans, extended repayment, graduated repayment, as well as student loan refinancing options, so you can choose the best strategy for your debt.