How Are IDR Payments Calculated: Inputs, Formula, and Examples

Income-driven repayment payments are calculated with a two-step formula: subtract a protected amount tied to the federal poverty guideline from your adjusted gross income to get your discretionary income, then multiply that figure by the percentage your plan uses (10%, 15%, or 20%) and divide by twelve. The specific multiplier for the protected amount and the payment percentage both depend on which IDR plan you are on, and your family size, state, and tax filing status feed into the numbers.

The Three Inputs Every IDR Formula Uses

Before any math happens, the Department of Education needs three pieces of information about you.

Your income. The regulations at 34 CFR 685.209 define income as the adjusted gross income reported on your most recent federal tax return. If your income has dropped significantly since you last filed, you can submit alternative documentation such as recent pay stubs instead.¹

Your family size. Larger households get a bigger protected amount because more of the borrower’s earnings go toward basic living costs. For IDR purposes, family size generally includes you, your spouse (unless separated or divorced), and any dependents you claim on your tax return.¹

Where you live. The federal poverty guidelines are higher in Alaska and Hawaii than in the 48 contiguous states. A single borrower in Alaska has a 2026 poverty guideline of $19,950 compared with $15,960 in the lower 48.² That difference flows directly into the payment formula, lowering the calculated payment for borrowers in those higher-cost areas.

Step One: Calculate Your Discretionary Income

Discretionary income is not your paycheck. It is the portion of your earnings the government considers available for loan payments after protecting enough income to cover necessities. The formula:

Discretionary income = AGI − (federal poverty guideline × plan multiplier)

Each plan uses a different multiplier for the protected amount:¹

IBR and PAYE use 150% of the federal poverty guideline.
ICR uses 100% of the federal poverty guideline.

If the result is zero or negative, your discretionary income is $0.

2026 Protected Amounts

The 2026 federal poverty guidelines in the 48 contiguous states are $15,960 for a single-person household and $33,000 for a family of four.² Applying the plan multiplier to those numbers gives a single borrower in the contiguous states these protected amounts:

IBR or PAYE (150%): $23,940 per year
ICR (100%): $15,960 per year

For a family of four on IBR or PAYE, the protected amount rises to $49,500.³

Step Two: Apply the Plan Percentage

Once discretionary income is set, each plan applies a fixed percentage to arrive at your annual payment, then divides by 12 for your monthly bill.

IBR for new borrowers (loans first taken out on or after July 1, 2014): 10% of discretionary income.⁴
IBR for borrowers with loans before July 1, 2014: 15% of discretionary income.⁴
PAYE: 10% of discretionary income.¹
ICR: the lesser of 20% of discretionary income, or the amount you would pay on a 12-year fixed schedule adjusted for your income.⁵

ICR is the only plan with a two-part calculation. The Department of Education publishes an annual notice in the Federal Register with updated income percentage factors used to adjust the 12-year figure, and for many borrowers that adjusted figure ends up lower than 20% of discretionary income.⁶

A Worked Example

Take a single borrower in the contiguous states with an AGI of $45,000, enrolled in IBR as a new borrower at 10%. The protected amount at 150% of the poverty guideline is $23,940. Subtracting that from AGI gives $21,060 in discretionary income. Ten percent of $21,060 is $2,106 per year, or roughly $175 per month.

The same borrower on ICR would have a protected amount of only $15,960 (100% of the guideline), pushing discretionary income to $29,040. Twenty percent of that is $5,808 per year, about $484 per month, though ICR’s alternative 12-year adjusted calculation could produce a lower final payment.

The percentage difference adds up quickly. On $21,060 of discretionary income, a borrower at 10% pays about $175 per month, while a borrower at 15% pays about $263. Nearly $90 more each month for the same income and family size.

When the Formula Produces a $0 Payment

If your AGI is at or below the protected amount for your plan, your required monthly payment is $0. You stay enrolled, and each month of a $0 payment still counts toward your forgiveness timeline. For a single borrower in 2026, that threshold is $23,940 on IBR or PAYE and $15,960 on ICR.

A $0 payment does not pause your loans. Interest may still accrue, depending on the plan and any interest subsidy that applies. Your servicer recalculates the payment annually, so if your income rises above the threshold, you will owe something the next year.

How Marriage and Tax Filing Change the Income Figure

Because the calculation starts with your AGI, how you file taxes matters when you are married. If you and your spouse file jointly, the Department of Education uses your combined household AGI. If you file separately, IBR, PAYE, and ICR consider only your individual income.⁷

Filing separately can lower monthly payments significantly when one spouse earns much more than the other. It may also cost you other tax benefits, including the student loan interest deduction and certain education credits, so weigh the full tax picture before choosing that route.

Parent PLUS Borrowers

Parent PLUS loans are not directly eligible for IBR or PAYE. The only IDR plan available is ICR, and it requires an extra step: you must first consolidate the Parent PLUS loan into a Direct Consolidation Loan.⁴ After consolidation, the same ICR formula applies: the lesser of 20% of discretionary income or the 12-year adjusted amount.

A workaround known as the double consolidation loophole previously let Parent PLUS borrowers reach more favorable plans by consolidating twice. That was phased out as of July 1, 2025, and is no longer available.

Recertification Recalculates the Number Each Year

IDR payments are not fixed. Every 12 months you recertify, and the formula runs again with your updated AGI and family size. If your income went up, your payment goes up; if it fell, your payment falls, and it can go to $0 if you now fall below the protected amount.

Missing the recertification deadline changes the calculation in two costly ways. Your servicer must notify you at least three months in advance. If you still miss it, your monthly payment stops being based on income and resets to the amount you would owe under a standard 10-year schedule calculated from the balance you had when you first entered the IDR plan.⁸ At the same time, any unpaid interest that had built up is capitalized, meaning it is added to your principal balance so future interest is charged on a larger number.⁹ Submitting a new IDR application with current income documentation restarts the income-based calculation, but the capitalized interest cannot be undone.

A Note on SAVE and the Proposed RAP Plan

The SAVE plan (formerly REPAYE) used a different, more generous formula: it protected 225% of the poverty guideline before applying the payment percentage. That plan is no longer accepting new borrowers. A federal court injunction blocked its implementation, and the Department of Education has announced a proposed settlement agreement with the state of Missouri that would permanently end it. Borrowers who were on SAVE have been placed in a general forbearance, interest began accruing on those loans again on August 1, 2025, and that time does not count toward PSLF or IDR forgiveness.¹⁰

A proposed Repayment Assistance Plan (RAP) has been discussed as part of broader legislative changes, but as of mid-2026 its details remain in draft form and it is not yet available. If you need an IDR payment calculated now, the formulas that apply are IBR, PAYE, and ICR. PAYE and ICR enrollment remains open until July 1, 2027.⁴

1
eCFR. 34 CFR 685.209 – Income-Driven Repayment Plans
2
U.S. Department of Health and Human Services. 2026 Poverty Guidelines – 48 Contiguous States
3
United States Courts. 150% of the HHS Poverty Guidelines for 2026
4
Federal Student Aid. Top FAQs About Income-Driven Repayment Plans
5
Federal Student Aid. What Is the Income-Contingent Repayment (ICR) Plan?
6
Federal Register. Annual Updates to the Income-Contingent Repayment (ICR) Plan Formula for 2025 – William D. Ford Federal Direct Loan Program
7
Federal Student Aid. 4 Things to Know About Marriage and Student Loan Debt
8
MOHELA – Federal Student Aid. Income-Driven Repayment (IDR) Plans
9
Nelnet – Federal Student Aid. Interest Capitalization
10
Federal Student Aid. Stay Up-to-Date on Court Actions Affecting IDR Plans