Your Public Service Loan Forgiveness monthly payment is calculated by taking your discretionary income and multiplying it by a percentage set by your Income-Driven Repayment (IDR) plan, then dividing by twelve. Discretionary income is your adjusted gross income minus a multiple of the federal poverty guideline for your family size. Depending on the plan, the percentage runs from 5% to 20%, and the poverty guideline multiple runs from 100% to 225%. After 120 qualifying monthly payments while you work full-time for a qualifying employer, whatever remains on your Direct Loans is canceled.1
The Discretionary Income Formula
Every IDR calculation begins the same way. Your loan servicer takes your adjusted gross income (the figure from your federal tax return) and subtracts a protected amount tied to the federal poverty guideline for your household size. Whatever remains is your discretionary income, and only a slice of that number becomes your monthly bill.
The multiple of the poverty guideline depends on the plan. Pay As You Earn (PAYE) and Income-Based Repayment (IBR) protect 150% of the guideline. Income-Contingent Repayment (ICR) protects just 100%. The now-blocked SAVE plan protected 225%, the most generous figure the program has offered.
The guideline itself is reset each year by the Department of Health and Human Services. For 2026, the guideline for a single-person household in the 48 contiguous states is $15,960 per year, with roughly $5,740 added for each additional family member. Alaska and Hawaii use higher figures. Family size for this purpose includes you, your spouse if you file jointly, and any dependents, whether or not they live with you.
Payment Percentages by IDR Plan
Once discretionary income is set, your plan determines the percentage applied to it.
- Pay As You Earn (PAYE): 10% of discretionary income, using 150% of the poverty guideline. Available to borrowers who had no outstanding Direct Loan balance as of October 1, 2007, and received a disbursement on or after October 1, 2011.
- New IBR: 10% of discretionary income, using 150% of the poverty guideline. For borrowers who first borrowed on or after July 1, 2014.
- Old IBR: 15% of discretionary income, using 150% of the poverty guideline. For borrowers who took out their first loan before July 1, 2014.
- Income-Contingent Repayment (ICR): 20% of discretionary income (or a 12-year fixed-payment amount adjusted by an income factor, whichever is less), using 100% of the poverty guideline. ICR produces the highest payments of any IDR plan.
All four plans generate payments that count toward the 120 PSLF payments, alongside the standard 10-year plan. The standard plan technically qualifies, but it’s built to pay off the loan in exactly ten years, so nothing would be left to forgive at payment 120. That’s why most PSLF borrowers pick an IDR plan: the lower monthly payment leaves a balance behind at the finish line.
SAVE Is No Longer an Option
The Saving on a Valuable Education plan protected 225% of the poverty guideline and charged just 5% of discretionary income on undergraduate debt, with a weighted average of 5% to 10% for borrowers carrying both undergraduate and graduate loans. Courts blocked SAVE in 2024, and in December 2025 the Department of Education proposed a settlement that would end the plan entirely. No new borrowers can enroll, and existing SAVE borrowers have been placed in forbearance while the settlement is finalized. If you were on SAVE, the Loan Simulator at StudentAid.gov can show you what PAYE, IBR, or ICR would produce.
The Repayment Assistance Plan for New Borrowers
For loans first disbursed on or after July 1, 2026, the new Repayment Assistance Plan (RAP) is expected to be the only income-driven option. PAYE and ICR are scheduled to sunset by July 1, 2028; IBR will remain. The PSLF statute already lists RAP payments as qualifying toward the 120-payment requirement. Watch Federal Student Aid for the final RAP terms if you’re borrowing in the 2026–2027 academic year.
A Worked Example With 2026 Numbers
Say you’re single, no dependents, earning $50,000 a year, and enrolled in PAYE. The 2026 poverty guideline for a one-person household is $15,960. Your servicer multiplies that by 1.5 to get the protected amount of $23,940. Discretionary income is $50,000 minus $23,940, or $26,060. PAYE takes 10% of that: $2,606 per year, divided by 12, for a monthly payment of about $217.
Compare that to Old IBR at 15%: $26,060 × 0.15 ÷ 12 comes to roughly $326 per month. Over 120 months, that $109 monthly gap adds up to more than $13,000 in extra payments before forgiveness arrives. The plan you pick isn’t a minor detail.
Had SAVE still been available, the numbers would look sharper still. Protecting 225% of the guideline ($35,910) would leave discretionary income of $14,090, and at 5% for undergraduate-only debt, the monthly payment would be about $59. Your plan choice drives both your monthly budget and the total amount that ends up forgiven.
When the Formula Produces $0
If your income is low enough, the formula can produce a monthly payment of zero. That happens more often than borrowers expect, especially for people in entry-level public service jobs with larger families. Those $0 months still count toward PSLF, as long as you’re employed full-time by a qualifying employer during the month. You don’t need to send a check or make a special request. Each $0 month is a qualifying payment, quietly moving your count toward 120.
This is one of the most misunderstood parts of the program. Some borrowers avoid IDR or try to make voluntary payments because they assume $0 can’t possibly count. It does.
How Marriage and Tax Filing Change the Number
If you’re married, how you file taxes feeds directly into the formula. Filing jointly combines both incomes into a single adjusted gross income, which can push your payment up substantially.
Filing separately under PAYE, IBR, or ICR removes your spouse’s earnings from the calculation and leaves only your individual income in the formula. For a borrower whose spouse earns significantly more, that difference can cut the monthly payment by hundreds of dollars.
The trade-off is real. Filing separately often costs you access to education tax credits, lowers thresholds for IRA contribution deductions, and can raise your overall tax bill. Whether the IDR savings outweigh the tax cost depends on the specific numbers. For borrowers with large balances on a PSLF track and higher-earning spouses, the math often favors filing separately, but run both scenarios each year.
Annual Recertification Keeps the Calculation Current
Your IDR payment is not a set-it-and-forget-it figure. You have to recertify income and family size every year. Your servicer will notify you around 90 days before the deadline. Miss it, and the consequences are serious: you can be removed from your IDR plan and placed on the standard 10-year schedule, which produces the highest monthly payment; unpaid interest may capitalize onto your principal; and any months you spend off an IDR plan don’t count toward your 120 PSLF payments.
Recertification typically uses your most recent tax return. If your income has dropped meaningfully since you last filed, you can submit recent pay stubs or an employer letter reflecting your current earnings instead. That alternative documentation can lower your payment sooner than waiting for next year’s return to catch up with reality.
Tax Treatment When Forgiveness Arrives
Debt canceled under PSLF is not federal taxable income. That’s a permanent feature of the program and is unaffected by the expiration of the American Rescue Plan Act’s broader student loan tax exclusion on December 31, 2025. When your remaining balance is wiped out after 120 qualifying payments, you won’t receive a federal tax bill on the forgiven amount.
That protection is specific to PSLF. Borrowers who reach forgiveness through ordinary IDR timelines (20 or 25 years of payments) without qualifying public service employment can now face a federal tax bill on the forgiven balance, added to their taxable income for that year. For PSLF borrowers, staying with qualifying employment through the full 120 months preserves both the balance cancellation and the tax exclusion.