The dual calculation rule of ICR
The Income-Contingent Repayment (ICR) plan is unique because your payment is the lesser of two calculations:
1. 20% of your discretionary income (AGI minus 100% of the federal poverty guideline for your family size).
2. The amount you would pay on a standard 12-year fixed repayment plan, multiplied by an annual Income Percentage Factor published by the Department of Education.
This cap protects higher-earning borrowers with large loan balances from exorbitant monthly payments.
Worked example
For a borrower with $48,000 AGI, family size 1 (poverty line $15,060), and $32,000 in Direct Loans at 6.53%:
Calculation 1 (20% discretionary): ($48,000 - $15,060) × 20% = $6,588/year = $549/month.
Calculation 2 (12-year standard × factor): A 12-year payment on $32,000 is approximately $321/month. Multiplied by the ~88% income factor for this bracket, payment is approximately $282.48/month.
The borrower pays the lesser amount: $282.48 per month.
Inputs for the ICR payment calculator
Adjusted Gross Income
Annual AGI from your federal tax return.
Family size
Household size for the 100% poverty threshold.
Direct loan balance
Total eligible loan balance.
Interest rate
Weighted average interest rate.
CALCULATOR QUESTIONS
How to calculate max loan ICR questions
Are Parent PLUS loans eligible for ICR?
Yes! Parent PLUS loans consolidated into a Direct Consolidation Loan are eligible for ICR, making it the primary IDR pathway for parent borrowers seeking PSLF or forgiveness.