Like most programs, Income Driven plans approval and calculation criteria are set by Congress. As a result, your servicer has to abide by these regulations and cannot take “special circumstances” into consideration. The formula is very black and white and if you know some key numbers you can easy understand how the plan is calculated.

The key pieces of information you need is your Adjusted Gross Income (AGI) from the previous year, and the poverty level based on your location and family size.

To figure out the IBR you do the following equation:

1. AGI – 150% of the poverty line for family size and state

2. Take this number and multiply it by 15%. This gives you your yearly amount you owe

3. To figure out your monthly payment divide the answer from number 2 by 12.

The following is an example of how the equation works with completely made up numbers.

AGI=50,000 150% of Poverty Line=20,000

1)50,000-20,000=$30,000

2)15% of $30,000=$4,500

3)$4500 divided by 12=$375 a month

PAYE is figured out practically the same way, the only difference is it is 10% of the figure you multiply in instead of 10%.

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