Student Loan FAQ

Income-driven repayment (IDR) is a set of federal student loan repayment plans that base your monthly payment on your income and family size rather than your loan balance. After 20 or 25 years of qualifying payments (depending on the plan), any remaining balance may be forgiven. The most common IDR plans include SAVE, PAYE, IBR, and ICR. Each plan uses a different formula to calculate your payment, so it is important to check with your loan servicer or studentaid.gov to find the best plan for your situation.

Refinancing federal student loans into a private loan may lower your interest rate and monthly payment, but it also means giving up federal protections. You lose access to income-driven repayment plans, loan forgiveness programs (such as Public Service Loan Forgiveness), deferment and forbearance options, and any future federal relief measures. For borrowers with stable employment, strong credit, and no plans to use federal benefits, refinancing can be a smart financial move. However, if you rely on IDR plans or work toward loan forgiveness, keeping your federal loans is generally recommended.

Your standard monthly payment is calculated using the standard amortization formula. It takes your loan balance (principal), annual interest rate (APR), and loan term in years, and computes a fixed monthly payment that pays off both principal and interest over the loan term. This is the same formula used by most mortgage, auto, and student loan calculators.

The IDR calculator on this site provides a simplified estimate based on a percentage of your discretionary income, using federal poverty guidelines and commonly cited IDR plan parameters. It is designed for general informational purposes and does not reflect the exact formulas used by federal loan servicers. Actual IDR payment amounts depend on the specific repayment plan, loan type, and current federal regulations. Always verify your actual payment with your loan servicer or studentaid.gov.

For income-driven repayment plans, discretionary income is generally the amount by which your adjusted gross income (AGI) exceeds a certain percentage of the federal poverty guideline for your family size and state. The exact multiplier varies by plan — for example, the SAVE plan uses 225% of the poverty guideline, while older plans like IBR use 150%. The calculation on this site uses a configurable percentage for estimation purposes.

Before refinancing, compare interest rates across multiple lenders, consider whether you might need federal benefits in the future, and check for any prepayment penalties on your current loans. If your credit has improved since you first took out the loans, you may qualify for a significantly lower rate. Keep in mind that most refinancing lenders perform a hard credit inquiry, which can temporarily affect your credit score.