If you’re struggling with student loan payments, income-driven repayment (IDR) plans can be a lifesaver. But with four options—SAVE, PAYE, IBR, and ICR—it’s hard to know which one’s right for you. I dug into the details to compare eligibility, payment formulas, forgiveness timelines, and interest subsidies. Here’s what I found.

Eligibility & Payment Formulas

Not all IDR plans are available to everyone. For example:

• SAVE (Saving on a Valuable Education): Open to most federal loan borrowers, regardless of loan type or disbursement date. Payments are capped at 10% of your discretionary income (5% for undergraduate loans starting July 2024).
• PAYE (Pay As You Earn): Limited to borrowers with newer loans (disbursed after Oct. 1, 2007) and a high debt-to-income ratio. Payments are also 10% of discretionary income.
• IBR (Income-Based Repayment): Available to borrowers with older loans, but payments are 15% of discretionary income (10% if you’re a new borrower).
• ICR (Income-Contingent Repayment): The only option for Parent PLUS loans, but payments are either 20% of discretionary income or what you’d pay on a 12-year fixed plan, whichever is less.

Example: If your discretionary income is $30,000, your monthly payment would be $250 under SAVE or PAYE, $375 under IBR, and $500 under ICR.

Forgiveness Timelines & Interest Subsidies

Forgiveness timelines vary, and some plans offer interest subsidies to keep your balance from ballooning:

• SAVE: Forgives remaining balances after 20 years (undergrad loans) or 25 years (grad loans). It also covers unpaid interest if your payment doesn’t cover it—huge for keeping your balance manageable.
• PAYE: Forgives balances after 20 years. No interest subsidy, but your payment won’t increase even if your income grows.
• IBR: Forgives after 20 years (new borrowers) or 25 years (older borrowers). No interest subsidy.
• ICR: Forgives after 25 years. No interest subsidy.

Interest subsidies can make a big difference. For instance, if your monthly payment is $150 but accrues $200 in interest, SAVE covers the $50 gap, while other plans let it add to your balance.

Which Plan Should You Choose?

It depends on your loan type, income, and goals.

• If you have undergrad loans and want the lowest payments, SAVE is likely your best bet.
• If you have grad loans, PAYE or SAVE might be better, depending on your income.
• If you have Parent PLUS loans, ICR is your only IDR option.

Takeaway: Compare your projected payments and forgiveness timelines carefully. Use the Federal Student Aid Loan Simulator to see how each plan plays out for your situation.

Full breakdown: https://studloans.com/idr-comparison