By Ziv Shay | Updated April 2026

Income-Driven Repayment Plans Compared: ICR vs IBR vs PAYE vs SAVE (2026)

Compare all 4 income-driven repayment plans side by side. See monthly payments, forgiveness timelines, and which IDR plan saves you the most.

UPDATED April 2026

The Short Answer: Which Plan Costs You the Least?

For most borrowers with undergraduate loans, the SAVE plan produces the lowest monthly payment — capping it at 5% of discretionary income instead of 10–20% under the other three plans. But SAVE isn't available to everyone, and your loan type, income, family size, and career path all change the math. Here's exactly how each plan works, who qualifies, and what you'll actually pay.

How All 4 Plans Work: Side-by-Side Comparison

Feature	ICR	IBR	PAYE	SAVE
Payment cap	20% of discretionary income or fixed 12-year payment, whichever is less	10–15% of discretionary income	10% of discretionary income	5% (undergrad) / 10% (grad) of discretionary income
Discretionary income definition	AGI minus 100% of poverty line	AGI minus 150% of poverty line	AGI minus 150% of poverty line	AGI minus 225% of poverty line
Forgiveness timeline	25 years	20 years (new borrowers) / 25 years	20 years	20 years (undergrad) / 25 years (grad)
Eligible loan types	Direct Loans, FFEL (if consolidated), Parent PLUS (if consolidated)	Direct Loans, FFEL	Direct Loans only	Direct Loans only
Parent PLUS eligible?	Yes (consolidated into Direct only)	No	No	No
New borrower requirement?	No	No (but rate differs)	Yes — must have borrowed after Oct 1, 2007 and received a disbursement after Oct 1, 2011	No
Interest subsidy	None — unpaid interest capitalizes	Government pays unpaid subsidized interest for 3 years	Government pays unpaid subsidized interest for 3 years	Government covers 100% of unpaid interest — balance never grows beyond original amount
Spousal income included?	Yes (always)	No (if filing separately)	No (if filing separately)	No (if filing separately)

Discretionary Income: Why the Definition Matters More Than the Percentage

The single biggest factor in your payment isn't the percentage — it's how "discretionary income" is calculated. Each plan shields a different chunk of your income from the payment formula.

The 2026 federal poverty guideline for a single person in the contiguous 48 states is $15,650. Here's how much income each plan protects:

ICR: Shields $15,650 (100% of poverty line) → Discretionary income starts at $15,651
IBR & PAYE: Shield $23,475 (150% of poverty line) → Discretionary income starts at $23,476
SAVE: Shields $35,213 (225% of poverty line) → Discretionary income starts at $35,214

This means a borrower earning $50,000/year has dramatically different discretionary incomes depending on the plan:

ICR: $50,000 − $15,650 = $34,350 discretionary
IBR/PAYE: $50,000 − $23,475 = $26,525 discretionary
SAVE: $50,000 − $35,213 = $14,787 discretionary

Real Payment Examples: $37,850 in Loans at $50,000 Salary

Using the average student loan debt of $37,850 with a single borrower earning $50,000/year (all undergraduate Direct Loans at the current 5.50% rate), here's what each plan actually costs monthly:

Plan	Monthly Payment	Annual Payment	Standard 10-Year Payment (comparison)
ICR	$412	$4,944	$411/mo
IBR (new borrower, 10%)	$221	$2,653
PAYE	$221	$2,653
SAVE	$62	$739

SAVE's payment is 85% lower than ICR and 72% lower than IBR/PAYE for this borrower. The combination of the 225% poverty-line shield and the 5% rate for undergrad loans makes it the clear winner on monthly cash flow. Use our student loan calculator to run your own numbers.

ICR: The Overlooked Plan That Covers Parent PLUS Loans

Income-Contingent Repayment is the oldest IDR plan and generally the most expensive. Most borrowers should avoid it — with one critical exception: it's the only income-driven option for Parent PLUS loans (after consolidating into a Direct Consolidation Loan).

Choose ICR if:

You hold Parent PLUS loans and need income-driven payments
You're pursuing Public Service Loan Forgiveness with consolidated Parent PLUS loans
You don't qualify for any other IDR plan

Avoid ICR if: You have standard Direct Loans and qualify for IBR, PAYE, or SAVE. The payment will almost always be higher.

IBR: Two Versions, Two Different Deals

Income-Based Repayment comes in two flavors depending on when you first borrowed:

Pre-July 1, 2014 borrowers: 15% of discretionary income, forgiveness after 25 years
New borrowers (on/after July 1, 2014): 10% of discretionary income, forgiveness after 20 years

IBR has a unique feature: your payment is capped at what you'd pay on the Standard 10-Year plan. If your income rises high enough that 10–15% of discretionary income exceeds the standard payment, you pay the standard amount instead.

Choose IBR if:

You have FFEL loans you don't want to consolidate (IBR accepts FFEL; PAYE and SAVE don't)
You don't meet PAYE's new-borrower requirement but borrowed after July 2014

PAYE: The Middle Ground

Pay As You Earn was the gold standard before SAVE arrived. It charges 10% of discretionary income (using the 150% poverty shield) with forgiveness after 20 years.

PAYE has the strictest eligibility: you must have been a new borrower on or after October 1, 2007, and received a Direct Loan disbursement on or after October 1, 2011. If you meet those dates, you probably also qualify for SAVE — which is almost always cheaper.

Choose PAYE if:

You specifically need to exclude spousal income by filing taxes separately and SAVE's legal status is uncertain (see below)
You want a proven plan with a long track record while SAVE litigation plays out

SAVE: The Cheapest Plan (With a Legal Asterisk)

The SAVE plan (Saving on a Valuable Education) replaced REPAYE in 2023 and offers the most generous terms of any IDR plan ever created:

5% of discretionary income for undergraduate loans (10% for graduate)
225% poverty-line shield — the highest of any plan
No interest capitalization — your balance never grows beyond what you originally borrowed, even if payments don't cover interest
Borrowers earning under $35,213 (single) pay $0/month and those payments still count toward forgiveness

The legal situation: Multiple lawsuits challenged SAVE's legality in 2024. As of early 2026, the Department of Education has continued administering the plan while appeals proceed. Check our SAVE plan guide for the latest status updates. If you're currently enrolled and making payments, those payments count toward forgiveness regardless of the litigation outcome.

Choose SAVE if:

You have Direct Loans (undergrad or grad) and want the lowest possible payment
You're comfortable with some regulatory uncertainty
You're a low-to-moderate earner who wants $0 payments to count toward forgiveness

How to Choose: Decision Framework

Follow this sequence:

Do you have Parent PLUS loans? → Consolidate and enroll in ICR. It's your only IDR option.
Do you have FFEL loans you can't or won't consolidate? → IBR is your best (and possibly only) IDR choice.
Do you have Direct Loans and earn under ~$35,000? → SAVE gives you a $0 payment that counts toward forgiveness.
Do you have Direct undergraduate loans? → SAVE at 5% almost certainly beats PAYE/IBR at 10%.
Do you have Direct graduate loans and are pursuing PSLF? → Compare SAVE vs other plans since SAVE's 10% grad rate equals PAYE, but the 225% shield still makes SAVE cheaper.
Are you married and want to exclude spousal income? → PAYE or IBR (file separately). SAVE now includes spousal income regardless of filing status.

Forgiveness and Taxes: What Happens at the End

Every IDR plan eventually forgives your remaining balance — after 20 or 25 years of qualifying payments. There are two paths to forgiveness, and the tax treatment differs:

IDR forgiveness (20–25 years): The forgiven amount is currently tax-free through December 31, 2025 under the American Rescue Plan Act. After 2025, forgiven balances may be treated as taxable income unless Congress extends the exemption. On a $37,850 balance, that could mean a $5,000–$10,000 tax bill.
PSLF (10 years / 120 payments): Forgiveness is permanently tax-free under IRC §108(f)(1). If you work for a qualifying employer — government, nonprofit, 501(c)(3) — this is the faster and cheaper path. See our guides for teachers, nurses, and lawyers.

Common Mistakes to Avoid

Not recertifying income on time. You must recertify annually. Miss the deadline and your payment jumps to the standard amount, and unpaid interest capitalizes (except on SAVE).
Consolidating when you don't need to. Consolidation resets your forgiveness payment counter to zero. Only consolidate if you must (e.g., FFEL → Direct for PSLF, or Parent PLUS → Direct for ICR).
Ignoring the spousal income trap. On ICR and SAVE, your spouse's income is always included. If your spouse earns significantly more, PAYE or IBR with married-filing-separately may produce lower payments — though you'll lose other tax benefits.
Assuming SAVE is permanent. Have a backup plan. If SAVE is struck down, the Department of Education has said borrowers would likely be moved to IBR or PAYE. Know which plan you'd land on.
Not running the numbers on refinancing. If you earn a high income and don't need forgiveness, private refinancing at a lower rate may save you more than any IDR plan. Current refinance rates from lenders like SoFi and Earnest start around 4.5–5.0% for excellent credit.

Frequently Asked Questions

Can I switch between income-driven repayment plans?

Yes. You can switch IDR plans at any time by submitting a new application through StudentAid.gov. However, switching plans may reset your forgiveness counter in some cases — specifically, if you move from PAYE to ICR or from IBR to ICR. Switching between SAVE, PAYE, and IBR generally preserves your payment count. Always confirm with your servicer before switching.

Do $0 payments on SAVE count toward loan forgiveness?

Yes. Under SAVE, if your income is below 225% of the federal poverty line (~$35,213 for a single borrower in 2026), your payment is $0 — and every month at $0 counts as a qualifying payment toward both IDR forgiveness and PSLF. This is one of SAVE's most powerful features for low-income borrowers.

Which plan is best if I'm pursuing Public Service Loan Forgiveness?

SAVE typically produces the lowest payments, meaning you pay the least before your balance is forgiven at 120 payments (10 years). For undergraduate loans, SAVE's 5% rate is half of PAYE/IBR. For graduate loans, SAVE and PAYE charge the same 10%, but SAVE's higher poverty-line shield still makes it cheaper. The only exception: ICR is required for consolidated Parent PLUS loans pursuing PSLF.

What happens to my IDR plan if I get married?

It depends on the plan and your tax filing status. On ICR and SAVE, your spouse's income is always included in the calculation regardless of how you file taxes. On IBR and PAYE, you can exclude spousal income by filing taxes as married-filing-separately — though this may increase your tax bill. Run both scenarios through a calculator to find the net savings.

Is the forgiven amount taxable?

Through December 31, 2025, all student loan forgiveness under IDR plans is tax-free under the American Rescue Plan Act. After that date, forgiven amounts may be treated as taxable income unless Congress extends the provision. PSLF forgiveness, by contrast, is permanently tax-free under federal law. Check our student loan tax guide for the latest updates.

This article is for informational purposes only and does not constitute financial or legal advice. Student loan programs and terms are subject to change. Consult a qualified financial advisor or visit StudentAid.gov for official program details. Loan balances, interest rates, and payment amounts shown are illustrative examples — your actual figures may differ based on your specific loan terms and financial situation.

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About the AuthorZiv Shay is a software engineer and fintech enthusiast based in Israel, building free financial tools since 2024. Learn more

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