PAYE Plan Calculator (USA) — Advanced

Q: What percentage does PAYE use?

The PAYE plan uses 10% of your discretionary income.

Q: Does PAYE include spouse income?

Yes, PAYE includes spouse income if you file jointly.

Q: Is PAYE better than SAVE?

SAVE is usually cheaper, but PAYE may be better for some borrowers depending on tax exposure and eligibility.

Q: Is PAYE available for Parent PLUS loans?

No, Parent PLUS borrowers are not eligible for PAYE.

Q: Is PAYE forgiveness taxable?

PAYE forgiveness is federally tax-free until 2025, though state tax laws vary.

Select Currency: Subsidized Loan Amount: Interest Rate for Subsidized Loan (%): Unsubsidized Loan Amount: Interest Rate for Unsubsidized Loan (%): Annual Income (AGI): Household Size: Annual Income Growth (%):

Introduction:

The PAYE (Pay As You Earn) repayment plan is a popular income-driven option for U.S. federal student loans. It limits monthly payments to 10% of your discretionary income while protecting 150% of the poverty guideline. This calculator helps you quickly estimate your monthly PAYE payment based on your income, loan balance, and household size.

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What Is the PAYE Repayment Plan?

The PAYE (Pay As You Earn) plan is an income-driven repayment (IDR) program for U.S. federal student loans. It caps monthly payments at 10% of your discretionary income, offers strong poverty-protection limits, and provides loan forgiveness after 20 years of qualifying payments.

How PAYE Calculates Your Monthly Payment

1. Determine your annual income (AGI)

The IRS-reported Adjusted Gross Income is used.

2. Determine your household size

Each additional family member increases your protected income.

3. Apply the poverty guideline for your family size

PAYE protects 150% of the poverty line.

4. Calculate discretionary income

Discretionary Income = AGI – (1.5 × Poverty Guideline)

5. Apply PAYE percentage

Annual Payment = Discretionary Income × 10%
Monthly Payment = Annual Payment ÷ 12

PAYE vs SAVE vs IBR vs ICR

Plan	% of Discretionary Income	Poverty Protection	Forgiveness
SAVE	5%–10%	225%	10–20 years
PAYE	10%	150%	20 years
IBR	10%–15%	150%	20–25 years
ICR	20%	100%	25 years

PAYE generally benefits borrowers with moderate income and moderate loan balances.

Who Is Eligible for PAYE?

Must have federal Direct Loans
Must demonstrate partial financial hardship
Cannot have borrowed before Oct 1, 2007
Must have received a Direct Loan disbursement after Oct 1, 2011
Parent PLUS borrowers are not eligible

PAYE Forgiveness

Remaining loan balance after 20 years of qualifying payments is forgiven.

FAQs on PAYE Repayment Plan Calculator

1. What percentage does PAYE use?

PAYE uses 10% of your discretionary income.

2. Does PAYE include spouse income?

Yes, if you file taxes jointly.

3. Is PAYE better than SAVE?

SAVE is usually cheaper but PAYE may be better for borrowers seeking lower forgiveness tax exposure.

4. Is PAYE available for Parent PLUS loans?

No. Parent PLUS borrowers are not eligible.

5. Is PAYE forgiveness taxable?

Currently, federal taxation is paused until 2025. State taxes vary.

6. Does PAYE adjust every year?

Yes, based on updated AGI and household size.

7. Can PAYE payments increase?

Yes — if your income increases.

8. Does PAYE cap payments at Standard repayment?

Yes — you will never pay more than the 10-year Standard plan monthly amount.