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The Student Loan Forgiveness Calculator estimates the amount of federal student loan debt that may be forgiven under income-driven repayment (IDR) plans including the SAVE (Saving on a Valuable Education) plan, IBR (Income-Based Repayment), PAYE (Pay As You Earn), and ICR (Income-Contingent Repayment). Under these plans, monthly payments are capped at a percentage of your discretionary income (the difference between your AGI and 150%-225% of the federal poverty guideline depending on the plan). After 20 or 25 years of qualifying payments, any remaining balance is forgiven. The calculator projects your total payments over the repayment period, the forgiveness amount, and the potential tax implications of forgiven debt, helping borrowers evaluate which plan offers the best combination of affordable payments and maximum forgiveness.
Monthly Payment = (AGI - Discretionary Income Threshold) x Payment Percentage / 12. Forgiveness Amount = Remaining Balance after 20 or 25 years of payments (including capitalized interest). Discretionary Income = AGI - (FPL x Poverty Multiplier)
- 1Enter your total federal student loan balance, weighted average interest rate, and loan types (Direct Subsidized, Unsubsidized, PLUS, or consolidated). Only Direct Loans qualify for most IDR plans without consolidation.
- 2Input your current Adjusted Gross Income (AGI) and expected annual income growth rate. The calculator projects your income forward over the 20-25 year repayment period.
- 3Select your family size to determine the applicable Federal Poverty Level (FPL). For 2025, the FPL for a single person in the contiguous U.S. is $15,650; add $5,580 for each additional family member.
- 4The calculator computes your discretionary income under each plan: SAVE uses 225% of FPL as the threshold; IBR (new borrowers after 7/1/2014) and PAYE use 150% of FPL; ICR uses 100% of FPL. SAVE plan further splits undergraduate vs graduate loans.
- 5Monthly payments are calculated: SAVE = 5% of discretionary income for undergraduate loans or 10% for graduate (weighted blend for mixed), IBR (new) = 10%, PAYE = 10%, ICR = 20% of discretionary income or 12-year fixed payment adjusted for income (whichever is less).
- 6The calculator tracks interest accrual, capitalization events, and the new SAVE interest subsidy (no interest accrues beyond the payment amount on subsidized AND unsubsidized loans). It projects the remaining balance at the forgiveness milestone.
- 7After 20 years (undergraduate only under SAVE and PAYE) or 25 years (graduate loans or ICR), the remaining balance is forgiven. Under current law, IDR forgiveness may be treated as taxable income (though SAVE forgiveness is currently tax-free through 2025 under ARPA provisions).
Discretionary income = $45,000 - (225% x $15,650) = $45,000 - $35,213 = $9,787. SAVE undergraduate payment = 5% x $9,787 / 12 = $40.78/month initially. Under SAVE, unpaid interest does not capitalize, keeping the balance from ballooning. After 20 years, remaining balance is forgiven.
FPL for family of 3 = $15,650 + $5,580 + $5,580 = $26,810. IBR threshold = 150% x $26,810 = $40,215. Discretionary income = $65,000 - $40,215 = $24,785. Monthly = 10% x $24,785 / 12 = $206.54. Payments increase with income but at 6.8% interest, the balance grows significantly before payments catch up. Forgiveness after 25 years for graduate borrowers.
FPL for 2 = $21,230. PAYE threshold = 150% x $21,230 = $31,845. Discretionary = $55,000 - $31,845 = $23,155. Monthly = 10% x $23,155 / 12 = $192.96. PAYE caps at the 10-year standard payment amount. After 20 years, remaining balance forgiven.
ICR uses 20% of discretionary income or a 12-year fixed payment. At $70K income, ICR payments are high enough that the loan may be repaid in full before the 25-year forgiveness point. ICR is the only IDR plan available for consolidated Parent PLUS loans.
New graduates with high debt-to-income ratios selecting the most affordable IDR plan to keep monthly payments manageable while early in their careers.
Borrowers comparing IDR forgiveness versus aggressive payoff strategies to determine which approach saves more money over the life of the loan.
Married couples deciding whether to file taxes jointly or separately to optimize IDR payments, weighing the payment reduction against lost tax benefits.
Mid-career professionals evaluating whether switching from the standard 10-year plan to an IDR plan with forgiveness would save money, especially if they have large balances relative to income.
Borrowers with mixed undergraduate and graduate debt choosing between SAVE (which separates the payment percentages) and other plans that use a flat 10% rate.
Consolidated Parent PLUS Loans
Parent PLUS loans are NOT eligible for SAVE, IBR, or PAYE. The only IDR option for Parent PLUS borrowers is to consolidate into a Direct Consolidation Loan and then enroll in ICR, which has the highest payment percentage (20% of discretionary income). This makes forgiveness less beneficial for Parent PLUS borrowers, as payments are relatively high. However, consolidated Parent PLUS loans can also qualify for PSLF through the ICR + PSLF combination if the parent works in public service.
Married Filing Separately Strategy
Under IBR, PAYE, and ICR, married couples filing jointly have both incomes counted in the payment calculation. Filing separately excludes the spouse's income but forfeits valuable tax benefits (EITC, education credits, higher income limits for many deductions). The SAVE plan excludes spousal income for new applications regardless of filing status, making it particularly advantageous for married borrowers with large loan balances and a higher-earning spouse.
Short-Term SAVE Forgiveness
Under the SAVE plan, borrowers with original principal balances of $12,000 or less receive forgiveness after just 10 years (not 20). Each additional $1,000 above $12,000 adds one year to the forgiveness timeline, up to the standard 20/25 years. This accelerated forgiveness is particularly beneficial for community college graduates and those with smaller loan balances who might otherwise pay more under a standard plan.
| Feature | SAVE | IBR (New) | PAYE | ICR |
|---|---|---|---|---|
| Payment % | 5% UG / 10% Grad | 10% | 10% | 20% |
| Poverty Threshold | 225% FPL | 150% FPL | 150% FPL | 100% FPL |
| Payment Cap | No cap | Standard 10-yr | Standard 10-yr | 12-yr fixed (adj.) |
| Forgiveness Timeline | 20yr UG / 25yr Grad | 20 years | 20 years | 25 years |
| Interest Subsidy | Yes (all loan types) | Subsidized only (3yr) | Subsidized only (3yr) | No |
| Eligible Loans | Direct Loans only | Direct & FFEL | Direct Loans only | Direct Loans only |
| Spouse Income (MFJ) | Excluded (new policy) | Included | Included | Included |
| $0 Payment Counts? | Yes | Yes | Yes | Yes |
Is forgiven student loan debt taxable?
Under current law (American Rescue Plan Act), student loan forgiveness through IDR plans is excluded from federal taxable income through December 31, 2025. After that, forgiven amounts may revert to being taxed as ordinary income unless Congress extends the provision. PSLF forgiveness has always been tax-free regardless of this provision.
Which IDR plan offers the lowest payments?
The SAVE plan generally offers the lowest payments because it uses 225% of FPL (highest threshold = smallest discretionary income) and charges only 5% for undergraduate loans. For a single person earning $45,000, the SAVE payment could be as low as $41/month vs $160-200 on IBR/PAYE.
Can I switch between IDR plans?
Yes, you can switch IDR plans at any time by submitting a new application through studentaid.gov. Prior qualifying payments generally count toward forgiveness. However, switching may affect your payment amount and the forgiveness timeline depending on the plans involved.
Do payments during forbearance or deferment count?
Generally no. Months in forbearance or deferment (where no payment is required) typically do not count toward the 20/25-year forgiveness timeline. However, certain administrative forbearances (like during the COVID pause) and some IDR processing periods may receive credit under recent policy changes.
What happens to my interest under the SAVE plan?
Under SAVE, if your monthly payment does not cover all accruing interest, the government subsidizes the remaining interest so your balance does not grow. This applies to both subsidized AND unsubsidized loans. This is a major improvement over other IDR plans where unpaid interest can capitalize and cause negative amortization.
Do private student loans qualify for IDR forgiveness?
No. IDR plans and federal forgiveness programs apply only to federal student loans (Direct Loans, consolidated FFEL/Perkins). Private loans from banks, credit unions, or private lenders have no government forgiveness options. Refinancing federal loans into private loans permanently forfeits access to IDR and forgiveness programs.
Pro Tip
If you have federal student loans and plan to pursue IDR forgiveness, enroll in the SAVE plan as soon as possible. Every month on an IDR plan counts toward your 20/25-year forgiveness clock. Also, make sure to recertify your income on time every year. Set a calendar reminder 30 days before your annual recertification deadline to avoid being moved to the standard repayment amount.
Did you know?
The total outstanding federal student loan debt in the United States exceeds $1.6 trillion, spread across approximately 43 million borrowers. The average borrower owes about $37,000, but roughly 7% of borrowers owe more than $100,000, collectively accounting for about one-third of all student debt. The SAVE plan, introduced in 2023, was the most significant overhaul of income-driven repayment since the IBR plan was created in 2009.
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