SAVE vs IBR Calculator
Determine which Income-Driven Repayment (IDR) plan saves you more on your federal student loans.
Lower Payment Plan
Based on your inputs, the SAVE plan offers the lowest monthly payment.
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Monthly Payment Comparison
Visualizing the difference between SAVE (Blue) and IBR (Green).
| Feature | SAVE Plan | IBR Plan (New) |
|---|---|---|
| Discretionary Income Base | 225% of Poverty Line | 150% of Poverty Line |
| Payment % | 5-10% | 10% |
| Interest Subsidy | 100% of unpaid interest | None (after 3 years) |
| Monthly Payment | $0.00 | $0.00 |
What is a save vs ibr calculator?
A save vs ibr calculator is a specialized financial tool designed to help federal student loan borrowers compare two of the most popular income-driven repayment (IDR) options: the Saving on a Valuable Education (SAVE) plan and the Income-Based Repayment (IBR) plan. With recent changes to federal lending laws, the SAVE plan has replaced the REPAYE plan, offering more generous terms for most borrowers.
Who should use this tool? Anyone with federal Direct Loans who is seeking to lower their monthly obligation or maximize loan forgiveness. A common misconception is that IBR is always better because it has “Income” in the name; however, the save vs ibr calculator often reveals that the SAVE plan’s higher poverty line exemption results in significantly lower monthly costs and prevents the loan balance from growing due to unpaid interest.
save vs ibr calculator Formula and Mathematical Explanation
The math behind these plans relies on the “Discretionary Income” calculation. Each plan defines discretionary income differently based on Federal Poverty Guidelines.
The Equations:
- SAVE Payment: (AGI – (225% × Poverty Guideline)) × (Plan % / 12)
- IBR Payment: (AGI – (150% × Poverty Guideline)) × (10% / 12)
| Variable | Meaning | Unit | Typical Range |
|---|---|---|---|
| AGI | Adjusted Gross Income | USD ($) | $20,000 – $250,000 |
| Poverty Guideline | Base level for family size | USD ($) | $15,060 (Size 1) + $5,380/addl |
| Multiplier | Protection threshold | % | 150% (IBR) vs 225% (SAVE) |
| Payment Rate | Discretionary % | % | 5% – 10% |
Practical Examples (Real-World Use Cases)
Example 1: The Single Professional
A borrower earns $60,000 AGI with a family size of 1 and $50,000 in undergraduate loans. Using the save vs ibr calculator, the SAVE payment would be based on income above $33,885 (225% of $15,060). At 5%, their monthly payment is roughly $108. Under IBR, the payment is based on income above $22,590 at 10%, resulting in a $311 monthly payment. SAVE saves this borrower $203 per month.
Example 2: The High-Debt Graduate
A doctor earns $150,000 with $250,000 in graduate loans. Under SAVE, the payment is 10% of discretionary income. While the payment is higher than the undergrad rate, the 100% interest subsidy in SAVE prevents the $250k balance from ballooning, which is a massive advantage over IBR where interest often capitalizes.
How to Use This save vs ibr calculator
- Enter your AGI: Find this on your most recent 1040 tax form.
- Input Family Size: This includes you, your spouse, and any children you provide more than half the support for.
- Loan Details: Enter your total balance and average interest rate. This helps the save vs ibr calculator determine if you qualify for the interest subsidy.
- Select Loan Type: Choose undergraduate for the 5% rate or graduate/mixed for the 10% (or weighted) rate.
- Review Results: Look at the “Lower Payment Plan” box for the immediate winner.
Key Factors That Affect save vs ibr calculator Results
- Poverty Line Updates: The HHS updates poverty guidelines annually, which shifts the discretionary income floor.
- Interest Subsidies: SAVE eliminates 100% of remaining interest if your payment doesn’t cover it. IBR does not.
- Filing Status: If married, SAVE allows you to exclude spouse income if filing separately, which heavily impacts results in a save vs ibr calculator.
- Loan Forgiveness Timeline: SAVE offers forgiveness in 10-25 years depending on original balance; IBR is strictly 20-25 years.
- Payment Caps: IBR payments are capped at the 10-year standard amount; SAVE has no cap, meaning high earners might pay more on SAVE.
- Capitalization: SAVE prevents interest capitalization in most scenarios, keeping the principal stable.
Frequently Asked Questions (FAQ)
1. Can I switch from IBR to SAVE?
Yes, most borrowers can switch, but any outstanding interest may capitalize when you leave the IBR plan.
2. Does the save vs ibr calculator include Parent PLUS loans?
Parent PLUS loans are generally ineligible for SAVE unless consolidated into a Direct Consolidation Loan and then put on the ICR plan, not SAVE.
3. What is the “New” IBR?
New IBR applies to those who were new borrowers on or after July 1, 2014. It uses 10% of discretionary income and a 20-year forgiveness period.
4. Why is my SAVE payment $0?
If your AGI is below 225% of the poverty line (about $33,885 for a single person), your calculated payment will be $0.
5. Is SAVE always better than IBR?
Usually, yes, due to the higher income protection and interest subsidy. However, IBR has a payment cap that SAVE lacks, which may benefit very high earners.
6. Does family size include unborn children?
Yes, if the child will be born during the year the certification covers and you will provide support.
7. How does the 5% undergrad rule work?
In the SAVE plan, payments on undergraduate loans are reduced to 5% of discretionary income starting July 2024.
8. What happens to my interest on IBR?
On IBR, the government pays the interest on subsidized loans for the first 3 years. After that, interest accrues and may capitalize.
Related Tools and Internal Resources
- Student Loan Payoff Calculator – Calculate how much extra payments shorten your term.
- PSLF Calculator – Estimate your forgiveness under Public Service Loan Forgiveness.
- Graduated Repayment Calculator – Compare plans that start low and increase over time.
- Standard Repayment Calculator – See the baseline 10-year monthly payment.
- Loan Consolidation Calculator – Check if consolidating your loans is right for you.
- Income-Driven Repayment Calculator – Detailed analysis of all IDR options.