Head to head
IBR vs PAYE: which costs less after SAVE?
Income-Based Repayment (IBR) against Pay As You Earn (PAYE), rule by rule and with real numbers for four borrowers, from the same engine that ranks your plans.
Rank every plan for me, free Ten questions, two minutes, your own numbers.
The short answer
PAYE costs less all in for all none sample borrowers; PAYE has the lower first payment for all of them. A lower bill and a lower total are different questions, and the answer turns on income, balance and how each plan ends, so the table shows all of it.
Four borrowers, both plans
| Borrower | IBR a month | IBR all in | PAYE a month | PAYE all in | Lower all in |
|---|---|---|---|---|---|
| $38,000 income, $27,000 in loans | $117 | $35,596 | not available | IBR | |
| $46,000 income, $58,000 in loans | $184 | $63,762 | not available | IBR | |
| $55,000 income, $48,000 in loans | $259 | $72,742 | not available | IBR | |
| $85,000 income, $95,000 in loans | $509 | $143,324 | not available | IBR | |
Assumes single, a family of one, first loan after July 1, 2014, a 6.5% rate, no public service, flat income, and a 22% tax on any taxable forgiveness. Your own numbers change the order. How each ends: $38: IBR $33,980 forgiven after 20 years, PAYE n/a; $46: IBR $89,280 forgiven after 20 years, PAYE n/a; $55: IBR $48,280 forgiven after 20 years, PAYE n/a; $85: IBR $96,380 forgiven after 20 years, PAYE n/a.
Rule by rule
Payment
IBR
10% of discretionary income if your first federal loan was made on or after July 1, 2014 ("new borrower" IBR), 15% if earlier. Discretionary income is adjusted gross income minus 150% of the poverty guideline for your family size. The payment never exceeds the 10-year Standard amount set when you enroll. Married filing separately counts only your income, not your spouse's; filing jointly counts both.
PAYE
10% of discretionary income (AGI minus 150% of the poverty guideline), capped at the 10-year Standard amount. Married filing separately counts only your income, not your spouse's.
Who qualifies
IBR
Direct and FFEL loans made before July 1, 2026. The partial financial hardship test was removed by the 2025 law, so nearly everyone with eligible loans qualifies, though some servicer tools still show "not eligible"; the paper form is the way through when that happens. Parent PLUS loans are excluded. A new loan or consolidation on or after July 1, 2026 removes IBR access.
PAYE
A path only for borrowers already enrolled in PAYE. Required a first loan on or after October 1, 2007 and a disbursement on or after October 1, 2011.
Forgiveness
IBR
After 20 years of qualifying payments for new borrowers, 25 for earlier borrowers. Earlier payments under IBR, PAYE, ICR and SAVE count. Months in RAP do not.
PAYE
After 20 years of qualifying payments.
Interest
IBR
For the first three years, unpaid interest on subsidized loans is covered by the government. Other unpaid interest accrues but is not capitalized while you stay in IBR. Leaving IBR for another plan capitalizes it once.
PAYE
Unpaid interest on subsidized loans covered for three years; other unpaid interest accrues.
PSLF
IBR
Qualifies.
PAYE
Qualifies.
Taxes
IBR
Forgiveness after 20 or 25 years is taxable federal income from 2026. PSLF forgiveness is not.
PAYE
Forgiveness is taxable federal income from 2026, except under PSLF.
How to apply
IBR
Online at studentaid.gov/idr. Choose IBR by name; "the plan with the lowest payment" lets the servicer choose. Consent to the IRS data share.
PAYE
Not open to new applicants. Borrowers on it stay until the plan closes.
Leaving it
IBR
Moving from the SAVE forbearance into IBR does not capitalize interest. Moving out of IBR later does, once. You can move to RAP if your loans predate July 2026.
PAYE
Moving to IBR or RAP is a plan change: unpaid interest may capitalize. Everyone on PAYE moves by July 1, 2028.
Dates
IBR
No sunset for loans made before July 1, 2026.
PAYE
Closes no later than July 1, 2028.
Who each one fits
IBR is good for
- Higher earners: the Standard-payment cap limits what you pay
- Borrowers close to 20 or 25 years of income-driven payments
- Anyone who wants the option to switch to RAP later
Watch out
- Unpaid interest accrues (except subsidized loans for three years)
- Leaving IBR capitalizes unpaid interest once
- The 15% version and 25-year clock for loans before July 2014
PAYE is good for
- Borrowers already on PAYE and near the 20-year mark
Watch out
- Ends in 2028; the move is coming either way
Which one wins for you depends on your numbers.
Right Repay runs IBR, PAYE and every other federal plan on your income, household, balance and loan dates, ranks them on all-in cost, and shows the math. Positions 2 onward are free; the kit to switch is $29.
Rank my plans, freeSources
- 34 CFR 685.209, income-driven repayment plans Code of Federal Regulations
- Income-driven repayment plans Federal Student Aid
- Top FAQs about income-driven repayment plans Federal Student Aid
- IDR Plan Request, official PDF (OMB 1845-0102) Federal Student Aid
- IBR vs. RAP: key differences AccessLex Institute
- IBR vs RAP Tate Law
- Income-driven repayment Student Loan Borrower Assistance (NCLC)
- Public Law 119-21, the 2025 reconciliation act (student loan title) Congress.gov