Federal student loan repayment is more complex than a regular loan — there are multiple plans, income-based options, and forgiveness programs that all affect how much you'll ultimately pay. This calculator helps you compare your options so you can choose the plan that fits your income and goals.
Federal Student Loan Repayment Plans Explained
When you graduate with federal student loans, you are automatically placed on the Standard plan, but you have options to customize your repayment schedule:
- Standard Repayment: Fixed payments over 10 years. This plan has the highest monthly payment but minimizes the total interest you will pay overall.
- Extended Repayment: Fixed payments over up to 25 years. This provides a lower monthly payment, but you pay significantly more in total interest over time.
- Income-Driven Repayment (IDR): Capped payments based on a percentage (5% to 10%) of your discretionary income and family size. Any remaining balance is forgiven after 20 to 25 years of payments.
- SAVE Plan (Saving on a Valuable Education): The most generous IDR plan. It raises the discretionary income threshold to 225% of the poverty line, caps undergraduate payments at 5%, and fully subsidizes unpaid interest so your balance never grows.
Should You Pay Extra or Pursue Forgiveness?
A key decision for student loan borrowers is whether to pay off their loans aggressively or pay as little as possible to maximize forgiveness:
- Aggressive Repayment: If your total student loan balance is less than your annual income, focusing on aggressive payment (adding extra monthly principal) will likely yield the lowest total cost.
- Pursuing Forgiveness: If your total student loan balance is greater than your annual income, paying the minimum under an IDR plan and working toward forgiveness is often the most cost-effective long-term route.
Public Service Loan Forgiveness (PSLF)
If you work for a government agency, military branch, or qualifying 501(c)(3) nonprofit, you may qualify for the Public Service Loan Forgiveness (PSLF) program. Under PSLF, the federal government forgives your remaining student loan balance after just 10 years (120 qualifying payments) under an income-driven repayment plan. Better yet, the forgiven amount is 100% tax-free.
Frequently Asked Questions
Are private student loans eligible for Income-Driven Repayment (IDR)?
No. IDR plans, federal interest subsidies, and forgiveness programs (including PSLF) are strictly limited to federal student loans. Private student loans can only be paid under standard or extended amortized schedules agreed with your private lender.
What constitutes discretionary income under federal plans?
Discretionary income is calculated as your Adjusted Gross Income (AGI) minus a set percentage of the Federal Poverty Guideline for your family size. Under the SAVE plan, the threshold is 225% of the poverty guideline; under older plans like PAYE and IBR, the threshold is 150%.
Is student loan forgiveness taxable?
Under current federal law, forgiven student loan balances through standard IDR plans are temporarily tax-free, but that provision is set to sunset after 2025 unless extended by Congress. PSLF forgiveness is permanently tax-exempt. We estimate a 25% tax bracket in the calculator to prepare you for potential tax liability.
Managing student loans alongside other debts?
If you have credit card balances or car loans in addition to student loans, check out our Debt Snowball Calculator to see how to organize and accelerate your payoff.
Go to Debt Snowball Calculator →