Student loans calculator
To qualify for IBR, your required payment under the plan must be less than what you’d pay under the Standard Repayment Plan with a 10-year repayment period. PAYE is 20 years for everyone, and ICR is 25 years for everyone. REPAYE has a forgiveness timeline of 20 to 25 years. Any remaining loan balance is forgiven if your federal student loans are not repaid in full at the end of the repayment period.Īgain, note that IDR is the broad category of income driven repayment plans, of which IBR is one option. It's never more than the 10-year Standard Repayment Plan amount.Īdditionally, the IBR period is 20 years for new borrowers on or after July 1, 2014, and 25 years for existing borrowers that borrowed prior to July 1, 2014. 15% of your discretionary income if you did not borrow on or after July 1, 2014.10% of your discretionary income if you borrowed on or after July 1, 2014.That percentage varies by repayment plan: IBR is generally a percentage of your discretionary income. In addition, under New REPAYE, you can file taxes separately and exclude your spouse's income from the payment, which means many borrowers should consider filing as “married filing separately” for tax year 2023. Discretionary income is now prior year AGI minus 225% of the poverty line, which is a much bigger deduction. Borrowers will need to pay between 5% and 10% of discretionary income, weighted by the percent of your loans from grad school (all undergrad pays 5% while all grad pays 10%). The big difference is in how the payment is calculated. The New REPAYE / SAVE plan will keep the same forgiveness timeline, except for those with very small amounts of student loans, where it could be as short as 10 years. The payment percentage is 10% of discretionary income, defined as your prior year AGI minus 150% of the poverty line. The existing REPAYE plan requires payments for 20 years for undergrads and 25 years for grad degree holders. How Does the New IDR Plan Work?īiden's New IDR plan will transform student loan repayment. That's why if you owe a significant student loan balance, you might want to invest some of the money you're saving from the national student loan forbearance in getting a customized student loan plan from one of our CFP® and CFA student loan experts.
So just because the IDR calculator shows one plan as the cheapest, you need to know when and if you should switch when payments begin again after the student loan pause ends. While both New REPAYE and the PAYE plan allow you to file taxes separately and exclude a spouse's income from your calculated payment, the PAYE plan is 20 years for graduate degree holders while New REPAYE is 25 years if you have a grad degree.Īdditionally, your IDR payment might be based on 2018 or 2019 tax returns and might not need to be recertified until 2024 or even 2025. New REPAYE / SAVE Will Save Many Borrowers Money, But it's Not Best for Everyone We call this plan New REPAYE in this IDR calculator. This new plan will replace the old REPAYE plan and will be called the SAVE plan (Saving on a Valuable Education). The Department of Education plans to modify the terms of the existing REPAYE plan to create more generous repayment terms. No longer being able to enroll in PAYE or ICR.Paying 5% of discretionary income on undergraduate loans and 10% on graduate loans.The other provisions of the New IDR regulations happen July 1, 2024. Receiving a 100% subsidy of all interest that your required REPAYE / SAVE payment doesn't cover.Excluding your spouse's income from your payment if you filed your most recent tax return as “married filing separate”.Deducting 225% of the poverty line instead of 150% before paying anything.Starting July 30, 2023, these provisions of the New REPAYE / SAVE Plan will be available immediately: You also need to know what benefits arrive when. It's not enough to know what the cheapest plan is. Be Aware of Key Dates for IDR Plans in 2023 That's why we model the 3 most commonly used plans above with our income driven repayment calculator. The new IBR plan is virtually identical to the PAYE plan. The ICR plan is generally unhelpful as it requires 20% of your income.