Federal student loans offer four income-driven repayment (IDR) plans, each with different payment formulas and forgiveness timelines. With the SAVE plan (Saving on a Valuable Education) introduced in 2023 and refined since, monthly payments are lower than ever — and the math for most borrowers has changed significantly.
The Current IDR Plans
SAVE Plan — Payment = 10% of discretionary income above 225% of federal poverty level. For a single borrower earning $60,000, that's approximately $275/month on $35,000 in loans. Interest doesn't capitalize if payments are made on time. Forgiveness after 20 years for undergrad, 25 years for grad school.
PAYE — Payment = 10% of discretionary income. Requires partial financial hardship. Payment typically higher than SAVE. Forgiveness after 20 years.
IBR — Payment = 15% of discretionary income. Older plan, less favorable than PAYE. Forgiveness after 20–25 years.
ICR — Payment = 20% of discretionary income. Only option for Parent PLUS loans (or can be consolidated to access PAYE/SAVE via double consolidation). Least favorable terms.
How Discretionary Income is Calculated
Your income minus 225% of the federal poverty level for your family size. A single person at $60,000 income has discretionary income of roughly $24,600 (225% of FPL for a single person is ~$31,000). 10% of $24,600 = $246/month under SAVE. For step-by-step guidance on filing IDR applications and understanding the SAVE plan mechanics, a student loan repayment guide covers the latest plan options and forgiveness timelines.
Bottom Line
If you have federal student loans and haven’t evaluated the SAVE plan, do it now at studentaid.gov. Payments under SAVE are lower than any other IDR plan for most borrowers, and interest that doesn’t exceed your payment amount doesn’t capitalize. The difference between the Standard 10-year plan and SAVE over 20 years can be $20,000+ for median borrowers.