Which IDR plan has the lowest monthly payment?

The SAVE plan typically offers the lowest payments: 5% of discretionary income for undergraduate loans (10% for graduate), with a 225% FPL threshold. PAYE and IBR are 10% of discretionary income with a 150% FPL threshold. ICR is 20% of discretionary income with a 100% FPL threshold.

Student Loan Forgiveness Calculator

Q: Is student loan forgiveness taxable in 2026?

PSLF forgiveness is always tax-free under IRC Section 108(f)(1). IDR forgiveness was made tax-free through 2025 by ARPA Section 9675, and the OBBBA may extend this provision. If the tax-free provision expires, forgiven IDR balances would be treated as taxable income in the year of forgiveness, creating a potential 'tax bomb.'

Q: How many payments do I need for PSLF?

You need 120 qualifying monthly payments (10 years) while working full-time for a qualifying public service employer. Government agencies (federal, state, local, tribal) and most 501(c)(3) nonprofits qualify. Payments must be made under a qualifying repayment plan such as SAVE, PAYE, IBR, ICR, or the Standard 10-Year plan.

Q: What is the student loan forgiveness tax bomb?

The 'tax bomb' occurs when forgiven student loan debt under IDR plans is counted as taxable income. For example, if $80,000 is forgiven after 20-25 years of IDR payments, that amount is added to your AGI for the year, potentially creating a large tax bill. PSLF forgiveness is exempt from this tax.

Track your PSLF progress, estimate IDR forgiveness with the tax bomb, and compare whether forgiveness or standard repayment saves you more. Covers SAVE, PAYE, IBR, and ICR plans for 2026.

Public Service Loan Forgiveness -- tax-free after 120 qualifying payments

Current loan balance

Total federal student loan balance

Interest rate

Weighted average if multiple loans

Adjusted gross income (AGI)

Filing status

MFS can lower IDR payments but costs more in taxes

Family size

Include yourself, spouse, and dependents

Employer type

Must be government or 501(c)(3) for PSLF

Qualifying payments made

Check at StudentAid.gov or call your servicer

Repayment plan

SAVE has the lowest payments for most borrowers

Try another scenario

How to Use This Calculator

PSLF tab

Enter your current loan balance, interest rate, and AGI. The calculator projects your IDR monthly payment, how much will be forgiven tax-free after 120 qualifying payments, and your total savings vs standard repayment. Expand "More options" to adjust filing status, family size, employer type, payments already made, and repayment plan.

IDR Forgiveness tab

Enter your loan balance, interest rate, AGI, and AGI growth rate. The calculator simulates your payment trajectory over 20-25 years as your income rises, estimates the forgiveness amount, and calculates the potential tax bomb — the federal tax on the forgiven amount if it becomes taxable income.

Tax Bomb tab

Enter your estimated forgiveness amount (use the IDR tab to calculate this), the year of forgiveness, and your expected income at that time. See the federal and state tax bill, monthly savings needed to prepare, and whether accepting forgiveness plus the tax bomb is better than paying off the loan.

Share your result

Every input is encoded in the URL. Click Share to send your exact scenario to a partner, financial advisor, or student loan servicer.

The Formulas

IDR Monthly Payment

Discretionary Income = AGI − (FPL × Plan Multiplier)

Monthly Payment = Discretionary Income × Plan % ÷ 12

SAVE: 5% (undergrad) or 10% (grad), 225% FPL
PAYE: 10%, 150% FPL, 20-year forgiveness
IBR: 10% (new borrowers), 150% FPL, 20-year
ICR: 20%, 100% FPL, 25-year forgiveness

PSLF Forgiveness

Forgiven Amount = Remaining Balance after 120 qualifying payments

Tax on PSLF Forgiveness = $0 (tax-free under IRC §108(f)(1))

Tax Bomb Calculation

Federal Tax = Tax on (AGI + Forgiven Amount) − Tax on AGI alone
State Tax = Forgiven Amount × State Tax Rate
Total Tax Bomb = Federal Tax + State Tax

The critical difference: PSLF forgiveness is always tax-free. IDR forgiveness may be taxable income — the ARPA/OBBBA extension currently shields it from tax, but this provision may expire. Plan for both scenarios.

Example

Sarah — social worker in Ohio with $92K in loans

Sarah earns $48,000 AGI (single filer), family size 1, works for a county government agency. She has 36 qualifying PSLF payments. Her Direct Loans total $92,000 at 5.8% interest. She's on the SAVE plan.

PSLF tab

Monthly IDR payment (SAVE)$73

Monthly standard payment$1,010

Payments remaining84 (7.0 years)

Amount forgiven (tax-free)$91,200

Total savings vs standard$112,500

Sarah saves over $112K compared to standard repayment. Her low SAVE payment means almost all the balance is forgiven tax-free through PSLF.

IDR Forgiveness tab (if Sarah left government)

Initial IDR payment$73/mo

Final IDR payment (year 20)$198/mo

Total paid over 20 years$30,200

Amount forgiven$118,400

Tax bomb (if taxable)$26,100

Even with the potential tax bomb, IDR forgiveness saves Sarah $64,900 vs standard repayment. But PSLF (if she stays in government) saves her even more with zero tax.

FAQ

Is student loan forgiveness taxable in 2026? ▼

It depends on the program. PSLF forgiveness is always tax-free under IRC Section 108(f)(1). IDR forgiveness was made tax-free through 2025 by the American Rescue Plan (ARPA Section 9675), and the OBBBA may extend this provision. Check current law for the latest status. If the tax-free provision expires, forgiven IDR balances would be treated as taxable income in the year of forgiveness.

How many payments do I need for PSLF? ▼

You need 120 qualifying monthly payments (10 years). Payments must be made under a qualifying repayment plan (any IDR plan or the Standard 10-Year plan) while working full-time for a qualifying public service employer. Government agencies (federal, state, local, tribal) and most 501(c)(3) nonprofits qualify. Submit the Employment Certification Form (ECF) annually to track your progress at StudentAid.gov.

What is the student loan forgiveness tax bomb? ▼

When your remaining student loan balance is forgiven under an IDR plan, the IRS may treat the forgiven amount as taxable income in the year of forgiveness. For example, if $80,000 is forgiven and your AGI is $65,000, your taxable income for that year could jump to $145,000 — creating a tax bill of $15,000-$20,000. Start saving now if you expect IDR forgiveness. The IRS may also offer installment agreements if you cannot pay the full amount. PSLF forgiveness is exempt from this tax.

Which IDR plan has the lowest payment? ▼

For most borrowers, the SAVE plan offers the lowest payments: 5% of discretionary income for undergraduate loans (10% for graduate), with a higher poverty line threshold (225% of FPL vs 150%). SAVE also subsidizes unpaid interest, preventing negative amortization. PAYE and IBR are 10% of discretionary income with a 150% FPL threshold. ICR is the highest at 20% of discretionary income with a 100% FPL threshold.

Should I pursue forgiveness or pay off my student loans? ▼

It depends on your loan balance, income, and employer. PSLF is almost always worth pursuing if you qualify — tax-free forgiveness after 10 years. For IDR forgiveness, compare the total cost of standard 10-year repayment vs. IDR payments plus the potential tax bomb. Lower-income borrowers with high balances benefit most from forgiveness. Use the IDR and Tax Bomb tabs to compare scenarios at your exact numbers.

Related Calculators

Add This Calculator to Your Website

Embed the sum.money Student Loan Forgiveness Calculator on your site. Free, responsive, always up-to-date.