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.