Student Loan Forgiveness Eligibility Calculator
Navigating Income-Driven Repayment
Student loan debt can be overwhelming, especially for graduates entering public service or modest-paying careers. U.S. federal programs such as Pay As You Earn (PAYE) and Income-Based Repayment (IBR) tie monthly payments to your discretionary income. After 20 or 25 years of qualified payments—sometimes just ten years for public service—any remaining balance may be forgiven. Knowing whether you might qualify helps you plan for the long haul and make informed career choices.
How Monthly Payments Are Calculated
Income-driven plans use a formula that subtracts 150% of the poverty guideline for your family size from your adjusted gross income (AGI). A percentage—often 10%—of that amount becomes your annual payment cap. Dividing by twelve yields the monthly payment. In MathML form:
Here is income, represents the poverty guideline, is the percentage rate, and converts the percent to a decimal. The poverty guideline rises with family size. Our calculator approximates it as for a quick estimate.
Tax Implications of Forgiveness
Outside of specialized programs like Public Service Loan Forgiveness, the amount wiped away at the end of an IDR term is generally treated as taxable income under current law. That means a sizable balance could produce an equally sizable tax bill in the year of forgiveness. To help you anticipate this liability, the calculator includes a “Tax Rate on Forgiven Amount” input. The resulting estimate won’t replace professional advice, but it highlights the potential cost so you can set aside savings in advance.
Comparing IDR Plans
Not all income-driven plans are identical. Revised Pay As You Earn (REPAYE) and the newer Saving on a Valuable Education (SAVE) plan subsidize interest differently and use varying poverty line multipliers. Income-Based Repayment may require 15% of discretionary income but limits eligibility to certain borrowers. By toggling the percentage and years in the calculator, you can simulate the core differences between these programs and visualize how they influence the final balance.
| Plan | Payment % | Forgiveness Term | Interest Subsidy |
|---|---|---|---|
| SAVE | 5–10% | 10–20 years | Full on unpaid interest for lower incomes |
| PAYE | 10% | 20 years | Partial unpaid interest subsidy |
| IBR (new) | 10% | 20 years | Limited interest relief |
| IBR (old) | 15% | 25 years | Limited interest relief |
Strategies and Next Steps
Once you know your monthly payment, you can project how much of your balance may remain after 20 years. Interest accrues on the unpaid principal, so we compound annually for a rough estimate. Experimenting with income growth illustrates how raises shrink the forgiven balance. If the leftover amount seems high, explore Public Service Loan Forgiveness (PSLF) or accelerated repayment strategies. If your payment is higher than anticipated, double-check family size or talk with your loan servicer about other plans. The calculator gives a starting point for understanding where you stand.
Loan forgiveness policies can change, and precise eligibility depends on the type of loans, your employment history, and whether you consolidate. Always consult official resources or a financial advisor for guidance. By exploring the possibilities now, you can better prepare for the future and gauge how choices such as graduate school or job changes might affect your debt burden.
Continue planning with related AgentCalc tools like the income-driven payment explorer, refinance comparison calculator, and the student loan payoff planner to stress test multiple repayment paths.