Understanding Income-Driven Repayment Plans in 2026
Income-driven repayment (IDR) plans cap your federal student loan payment at a percentage of your discretionary income and forgive any remaining balance after 20-25 years of qualifying payments. Our IDR calculator helps you compare all four available plans—SAVE, PAYE, IBR, and ICR—so you can choose the one that minimizes your monthly payment or maximizes your forgiveness benefit.
2026 IDR Plan Comparison at a Glance
Each IDR plan calculates your payment differently. Here's how they compare:
Income-Driven Repayment Plans - 2026
| Plan | % of Income | Forgiveness | Eligibility |
|---|---|---|---|
| SAVE (Best for Most) | 5-10% | 20-25 years | All Direct Loans |
| PAYE | 10% | 20 years | New borrowers |
| IBR | 10-15% | 20-25 years | Partial hardship |
| ICR | 20% | 25 years | All Direct Loans |
The SAVE Plan: The New Standard for IDR
The Saving on a Valuable Education (SAVE) plan replaced the old REPAYE plan and offers the most generous terms for most borrowers. Key benefits include:
- Lower payments for undergraduate loans: Only 5% of discretionary income (down from 10%) for undergraduate loans.
- No interest capitalization: The government subsidizes interest not covered by your payment, preventing balance growth.
- Higher income protection: 225% of the poverty line is protected (vs. 150% under other plans), meaning more borrowers qualify for $0 payments.
- Forgiveness timeline: 20 years for undergraduate loans, 25 years for graduate or mixed loans.
SAVE Plan Payment Examples (2026)
How IDR Discretionary Income is Calculated
Your IDR payment is based on your discretionary income, which the federal government defines differently than household budgeting. For SAVE and other IDR plans:
Discretionary Income Formula
- AGI: Adjusted Gross Income from your tax return
- SAVE Plan: Multiplier is 225% of federal poverty line
- PAYE/IBR: Multiplier is 150% of federal poverty line
- Family Size: Includes you, spouse, and dependents
For 2026, the federal poverty line for a single person is approximately $15,060. Under SAVE, $33,885 (225% × $15,060) is protected. A single borrower earning $40,000 would have discretionary income of only $6,115, resulting in a $25/month payment (5% of $6,115 ÷ 12).
💡 Pro Tip: File Taxes Separately to Lower IDR Payments
If you're married and your spouse has income, filing taxes separately can lower your IDR payment because only your income is counted (except for ICR). However, filing separately may increase your tax burden or forfeit certain credits. Run the numbers with a tax professional to see if the IDR savings outweigh the tax costs. Use our Student Loan Calculator to compare scenarios.
IDR and Public Service Loan Forgiveness (PSLF)
IDR plans work hand-in-hand with PSLF. If you work full-time for a government or 501(c)(3) nonprofit organization, your IDR payments count toward PSLF's 120-payment requirement. After 10 years of qualifying payments while working in public service, your remaining balance is forgiven tax-free.
PSLF + IDR = Maximum Benefit
Example: $80,000 Debt, $50,000 Income
- • SAVE payment: ~$22/month
- • 10-year total paid: ~$2,640
- • PSLF forgiveness: ~$77,000+
- • Tax on forgiveness: $0
Result
Pay only $2,640 on $80,000 in loans through PSLF + SAVE!
IDR Loan Forgiveness After 20-25 Years
Even without PSLF, IDR plans forgive remaining balances after 20-25 years of qualifying payments:
- SAVE (Undergrad): Forgiveness after 20 years
- SAVE (Graduate/Mixed): Forgiveness after 25 years
- PAYE: Forgiveness after 20 years
- IBR (New Borrowers): Forgiveness after 20 years
- IBR (Old Borrowers): Forgiveness after 25 years
- ICR: Forgiveness after 25 years
Unlike PSLF, IDR forgiveness after 20-25 years may be taxable as income under current IRS rules. However, legislation passed in 2021 makes student loan forgiveness tax-free through 2026. Check current tax law before planning.
When to Choose Standard Repayment Over IDR
IDR isn't always the best choice. Consider sticking with the Standard 10-Year plan if: your income is high enough that IDR payments equal or exceed standard payments, you want to pay off loans quickly and avoid decades of debt, you're not pursuing PSLF or IDR forgiveness, or you want to minimize total interest paid. Use our Payoff Calculator to compare total costs.