IDR Plans Explained: SAVE vs PAYE vs IBR vs ICR
SAVE, PAYE, IBR, and ICR set payments by income rather than balance. SAVE charges 5% of discretionary income above 225% of the poverty line and subsidizes unpaid interest, with forgiveness after 20-25 years. PAYE and IBR use 10%, while ICR uses 20%.
What Are Income-Driven Repayment Plans?
Income-Driven Repayment (IDR) plans base your monthly student loan payment on your income and family size rather than your loan balance. There are currently four IDR plans: SAVE (Saving on a Valuable Education), PAYE (Pay As You Earn), IBR (Income-Based Repayment), and ICR (Income-Contingent Repayment). Each plan calculates your payment differently, and the best choice depends on your income, loan balance, and financial goals.
SAVE Plan: The Newest and Often Best Option
The SAVE plan, which replaced REPAYE, is generally the most generous IDR plan. It calculates your payment at 5% of discretionary income (for undergrad loans) with discretionary defined as income above 225% of the Federal Poverty Level. Crucially, SAVE has an interest subsidy — if your monthly payment doesn't cover accruing interest, the government subsidizes the remaining interest so your balance doesn't grow. Forgiveness comes after 20 years for undergrad and 25 years for graduate loans.
PAYE and IBR: Older but Still Useful
PAYE (Pay As You Earn) calculates payments at 10% of discretionary income (above 150% FPL) and caps payments at the 10-year Standard plan amount. Forgiveness is after 20 years. IBR has two tiers: for new borrowers after 2014, it's 10% of discretionary income with 20-year forgiveness (same as PAYE). For pre-2014 borrowers, it's 15% with 25-year forgiveness. Both PAYE and IBR require you to have a partial financial hardship to enroll initially.
ICR: The Least Generous but Most Available
Income-Contingent Repayment (ICR) is the oldest IDR plan and the only one available to Parent PLUS loan borrowers (after consolidation). It calculates payments at 20% of discretionary income (above 100% FPL) or a 12-year fixed payment — whichever is lower. Forgiveness comes after 25 years. ICR generally results in the highest monthly payments among the four IDR plans but is more flexible about loan types.
Which Plan Should You Choose?
For most borrowers, the SAVE plan will result in the lowest monthly payment and provides the best interest subsidy protection. PAYE may be better if you're pursuing PSLF and want a 20-year forgiveness timeline (vs 25 for SAVE for grad loans). IBR has the unique advantage of being codified by Congress rather than regulation, so it may be harder to eliminate through executive action. Use our IDR comparison calculator to see your specific numbers side by side.
Frequently Asked Questions
What is the current SAVE plan payment?
SAVE sets payments at 10% of discretionary income, defined as AGI minus 225% of the federal poverty line for your family size. It also waives any interest your payment doesn't cover, so your balance doesn't grow while you're paying. Payments recertify annually.
Which IDR plan has the lowest payment?
SAVE generally produces the lowest payment for most borrowers because it uses 225% of the poverty line (the most generous deduction) and a 10% rate. PAYE also charges 10% but uses 150% of the poverty line, so SAVE's discretionary-income floor is higher and its payment usually lower.
Does IDR forgiveness count as taxable income?
Historically yes — forgiven balances under income-driven repayment were taxed as income. However, recent legislation made IDR forgiveness tax-free through December 31, 2025, and many states follow the federal treatment. Check both federal and state rules for the year your forgiveness occurs.
How long does IDR forgiveness take?
Most IDR plans forgive the remaining balance after 20 or 25 years of qualifying payments — SAVE and PAYE at 20 years for undergrad loans, IBR and ICR at 20–25 years depending on when you borrowed. Only payments on IDR plans count toward PSLF, which forgives after 10 years.