What is the difference between new and old IBR?

New IBR charges 10% of discretionary income with forgiveness after 20 years. Older IBR charges 15% with forgiveness after 25 years. The formula is otherwise the same.

How does IBR compare to PAYE?

New IBR and PAYE both charge 10% of discretionary income and cap at the standard payment. The main difference is eligibility: PAYE uses borrower-date tests based on its cutoff dates, while new IBR uses the newer-borrower cutoff.

Can my IBR payment be $0?

Yes. If your income is below 150% of the federal poverty level, your discretionary income is $0, making your IBR payment $0. These $0 payments still count toward the forgiveness timeline and PSLF.

What happens to interest I can't afford to pay?

Under IBR, if your payment doesn't cover interest, the government pays the remaining interest on subsidized loans for the first three years. After that, unpaid interest can continue to accrue, and capitalization depends on the program rules in effect when you leave or change plans.

Is IBR forgiveness taxable?

The federal tax treatment of long-term IDR forgiveness depends on the law in effect when forgiveness occurs. PSLF-related forgiveness follows a separate federal tax treatment.

Can I switch from IBR to another plan?

Yes, you can switch at any time. However, switching plans may capitalize unpaid interest and could affect your forgiveness timeline. Compare all options carefully before switching.

IBR Payment Calculator

Calculate your Income-Based Repayment plan payment. IBR caps payments at 10–15% of discretionary income with 20–25 year forgiveness.

Adjusted Gross Income (AGI)

Family Size

Total Loan Balance

Interest Rate (Annual)

Borrower Type

IBR Monthly Payment

$228.42

10% of discretionary income

Standard 10-Year Payment

$488.37

For comparison

Monthly Savings

$259.95

0.53% less than standard

Forgiveness After

20 years

New borrower timeline

Total Interest Over Life

$45,163.59

If forgiven after plan period

Discretionary Income

$27,410.00

Income minus 150% FPL

Payment Comparison (Monthly vs. Lifetime)

Monthly Payment

IBR: $228.42

Standard: $488.37

Lifetime Cost

IBR Total: $54,820.00

10-Yr: $58,604.19

Plan Comparison: New vs. Existing Borrower

Metric	New Borrower (10%)	Existing Borrower (15%)
Discretionary %	10%	15%
Forgiveness Timeline	20 years	25 years
Monthly Payment Calc	$228.42	$342.63
Monthly Payment (This Loan)	$228.42

📋 IBR Program Details

Discretionary Income: Your AGI minus 150% of the Federal Poverty Line for your family size.

New vs. Existing Borrowers: Rules changed in 2014. New borrowers pay 10%, existing (or those who borrowed before July 2014) pay 15%.

Payment Cap: Your IBR payment cannot exceed the Standard 10-year repayment amount.

Income Recertification: Required annually; payments adjust when income changes.

Tax Bomb: Forgiven amount after plan term may be taxable income in the forgiveness year.

Eligible Loans: Direct Loans only. FFEL or Perkins loans must be consolidated.

Planning notes, formulas, and examples

About the IBR Payment Calculator

Income-Based Repayment (IBR) is one of the long-running income-driven repayment plans for federal student loans. It caps your monthly payment at a percentage of your discretionary income, making it manageable for borrowers whose income is modest relative to their debt.

Under the rule set modeled on this page, newer borrowers pay 10% of discretionary income with forgiveness after 20 years, while older borrowers pay 15% with forgiveness after 25 years. In both cases, the payment is capped at the standard 10-year amount.

This calculator estimates an IBR payment, shows the cap comparison, and sketches the forgiveness timeline for the assumptions used on the page.

When This Page Helps

IBR is a good fit for borrowers who need lower payments but want the security of a payment cap. Unlike SAVE, which has no cap, IBR ensures your payment never exceeds the standard 10-year amount. This makes IBR particularly appealing for borrowers whose income may grow significantly and who want predictable maximum exposure.

How to Use the Inputs

Enter your adjusted gross income.
Select your family size.
Select whether you are a newer borrower or an older borrower.
Enter your total loan balance and interest rate.
View your IBR monthly payment and the standard payment cap.
Review the forgiveness timeline (20 or 25 years).

Formula used

Discretionary Income = AGI − 150% × FPL
IBR Payment = Discretionary Income × 10% (new) or 15% (old) / 12
Capped at standard 10-year payment amount

Example Calculation

Result: $228/month (IBR) vs $488/month (standard)

With $50,000 AGI and family size 1, discretionary income is approximately $27,410. New IBR at 10% = $2,741/year or $228/month. The standard 10-year payment on $45,000 at 5.5% is $488/month, so IBR saves $260/month.

Tips & Best Practices

If your IBR payment doesn't cover all accruing interest, unpaid interest may capitalize in certain situations.
Recertify income annually to maintain IBR eligibility; late recertification causes interest capitalization.
IBR is available for many Direct and FFEL loan types, including some consolidation loans that do not contain parent PLUS debt.
Compare IBR with the other IDR plans you qualify for on your application date in Loan Simulator, especially while court actions continue to affect SAVE implementation.
If pursuing PSLF, IBR payments count toward the 120 qualifying payments.
Filing taxes as Married Filing Separately can lower your IBR payment by excluding spouse income.

Understanding the IBR Payment Cap

One of IBR's key features is the payment cap. Your monthly payment can never exceed what you'd pay on the standard 10-year plan. As your income grows, your IBR payment increases but stops at the standard amount, ensuring predictability. If your income grows high enough that IBR exceeds the standard, you're effectively on the standard plan.

IBR vs Other IDR Plans

IBR is often compared with SAVE-, PAYE-, and ICR-style repayment formulas. Its main distinguishing feature is the payment cap tied to the standard 10-year amount, which can be useful for borrowers who expect income growth and want a defined ceiling.

When IBR Makes the Most Sense

IBR is most useful when you need lower payments, want the security of a payment cap, and expect income to change over time. It is often modeled alongside PSLF because qualifying IBR payments can count toward that separate forgiveness path.

Sources & Methodology

Last updated: March 31, 2026

Frequently Asked Questions

New IBR charges 10% of discretionary income with forgiveness after 20 years. Older IBR charges 15% with forgiveness after 25 years. The formula is otherwise the same.