Calculate your Pay As You Earn plan payment at 10% of discretionary income. See 20-year forgiveness timeline and standard payment cap.
Pay As You Earn (PAYE) caps your monthly student loan payment at 10% of discretionary income, never exceeding the standard 10-year payment amount. After 20 years of qualifying payments, any remaining balance is forgiven. PAYE was designed as a more generous alternative to IBR for qualifying borrowers.
To be eligible, you must be a new borrower as of October 1, 2007, and have received a loan disbursement after October 1, 2011. You must also demonstrate a partial financial hardship, meaning your PAYE payment would be less than the standard 10-year amount.
This calculator computes your PAYE payment based on your income and family size, compares it to the standard payment, and shows your potential savings. It's especially useful for borrowers deciding between PAYE, IBR, and the newer SAVE plan.
Students, parents, and educators all gain valuable perspective from precise paye payment data when planning academic paths, managing workloads, or setting realistic performance goals. Return to this calculator each semester or grading period to stay on top of evolving academic targets.
PAYE offers a balance of low payments (10% of discretionary income), a hard cap at the standard payment, and a 20-year forgiveness timeline. For eligible borrowers with moderate income and high debt, PAYE provides affordable payments with eventual forgiveness. The payment cap also protects you as your income grows. Real-time results let you test different scenarios instantly, helping you set achievable goals and build an effective plan for academic success.
Discretionary Income = AGI − 150% × FPL PAYE Payment = Discretionary Income × 10% / 12 Capped at standard 10-year payment Forgiveness after 20 years (240 payments)
Result: $174/month
With $48,000 AGI and family size 2, the FPL is ~$20,440 and 150% is $30,660. Discretionary income = $17,340. PAYE = 10% × $17,340 / 12 = $145/month. The standard payment on $55,000 at 5% is $583/month, so PAYE saves $438/month.
PAYE sits between IBR and SAVE in generosity. It offers lower rates than old IBR (10% vs 15%), a shorter forgiveness timeline (20 vs 25 years), and the security of a payment cap that SAVE lacks. For eligible borrowers, PAYE represents a well-balanced income-driven option.
PAYE is a qualifying plan for PSLF. Since PAYE payments are typically well below the standard amount for high-debt borrowers, combining PAYE with PSLF can result in paying far less than the loan balance over the 10-year PSLF period. The remaining balance is then forgiven tax-free.
If you expect to receive PAYE forgiveness after 20 years (without PSLF), start planning for the potential tax liability. The forgiven amount could be treated as taxable income. Consider setting aside savings in anticipation, or hope for an extension of the current tax exemption beyond 2025.
You must be a new borrower as of October 1, 2007 (no outstanding balance on a Direct Loan or FFEL loan) and have received a Direct Loan disbursement on or after October 1, 2011. You must also demonstrate partial financial hardship.
PAYE and new IBR both charge 10% of discretionary income, but PAYE has a 20-year forgiveness timeline (vs 20 years for new IBR). Eligibility requirements differ: PAYE has stricter borrower requirements but identical payment mechanics.
If your income grows enough that your calculated PAYE payment exceeds the standard 10-year amount, you pay the standard amount. You remain on PAYE and continue accumulating payments toward forgiveness.
Yes. You can switch to any repayment plan at any time. Be aware that switching may capitalize accrued interest and could restart or affect your forgiveness countdown depending on the new plan.
PAYE forgiveness after 20 years is tax-free through 2025 under the American Rescue Plan. After 2025, it may become taxable unless extended. PSLF forgiveness through PAYE is always permanently tax-free.
SAVE generally offers lower payments for undergrad borrowers (5% vs 10%) and has no payment cap. PAYE is better if you want the certainty of a payment cap or if you have graduate loans and value the established 20-year forgiveness track.