Short answer: usually less than you think, and sometimes nothing at all. For a lot of borrowers, an income-driven plan does not save money. It moves money. The payment drops now and the total goes up later.
That is not an argument against these programs. A payment you can actually make is worth a great deal, and for some borrowers the savings are enormous and completely real. But “saves you money” and “lowers your payment” are two different claims, and almost everything written about repayment plans blurs them together.
So we ran the numbers. Below are five ordinary borrowers put through the same calculation engine that powers our advisor platform, comparing the Standard plan against RAP (the new default since July 1, 2026) and IBR (the one older income-driven plan still open).
The assumptions, stated up front: a 6.53% blended federal interest rate, income growing 3% a year, federal poverty guidelines inflating on their published schedule, a 30-year horizon, and tax on any forgiven balance calculated at 2026 federal brackets. No state tax. These are illustrations of how the formulas behave, not a projection of your loans.
What we found
| The borrower | Standard | RAP | IBR | Monthly relief |
|---|---|---|---|---|
| $40k balance, $55k income, single | $455/mo · $54,576 total | $229/mo · $66,412 | $259/mo · $70,869 | $226/mo |
| $120k balance, $75k income, single | $1,364/mo · $163,729 | $438/mo · $249,975 | $426/mo · $176,670 | $939/mo |
| $90k balance, $60k income, public service | pays $122,797, nothing forgiven | pays $43,667, $84,000 forgiven | pays $41,339, $107,431 forgiven | $773/mo |
| $30k balance, $140k income, single | $341/mo · $40,932 | $1,167/mo · $32,382 | $341/mo · $40,932 | $0/mo |
| $80k balance, $90k income, married, 2 kids | $910/mo · $109,152 | $500/mo · $126,463 | $338/mo · $125,827 | $572/mo |
The bolded number in each row is the cheapest path. The totals for RAP and IBR include the tax owed on any forgiven balance, because that bill is part of the cost even though it arrives twenty or thirty years late.
Four things fall out of this.
1. For most borrowers, the “savings” is a loan against your future self
Look at the first row. That borrower cuts their payment by $226 a month, which is real money in a real budget. But they pay for eleven extra years, and by the end they have paid $11,836 more than they would have on Standard. On IBR the gap is $16,293.
Nothing was forgiven in that row, because with a normal career the income rose faster than the balance fell behind. That is the ordinary case: the borrower pays the loan off eventually, just slowly and with much more interest. The monthly relief is genuine. The savings are negative.
2. The forgiveness that makes the math work is taxable, and the tax is large
In the second row, the borrower with $120,000 of graduate debt does reach forgiveness on IBR: $139,520 wiped out at year twenty. That sounds like the whole ballgame until the tax bill lands. Under current law that forgiven balance counts as ordinary income in the year it is forgiven, and at 2026 federal rates it costs $39,470.
Once you count it, IBR runs $176,670 against Standard’s $163,729. The forgiveness was worth having and it still did not beat simply paying the loan.
There is one exception, and it is the reason the third row looks so different.
3. Public service is where the savings are enormous and tax-free
Public Service Loan Forgiveness is the only forgiveness in the federal system that is not taxed. It arrives after 120 qualifying payments, which is ten years rather than twenty or thirty.
Look at what that does. Our public-service borrower on the Standard plan pays $122,797 and has nothing forgiven, because a ten-year plan retires the loan in exactly the time it takes to qualify. The same borrower on IBR pays $41,339 over the same ten years and has $107,431 forgiven, tax-free.
The difference between those two paths is $81,458, and the only thing separating them is which plan the borrower enrolled in. Nothing about the job, the balance, or the income changed.
This is the single most expensive avoidable mistake in federal student loans: working for a qualifying employer while sitting on a plan that quietly pays the loan off before forgiveness can arrive.
4. Sometimes the program does literally nothing
The fourth row is the one nobody writes about. A borrower earning $140,000 with $30,000 left owes exactly the same $341 a month on IBR as on Standard. Not similar. Identical.
That happens because IBR caps your payment at the Standard amount, and this borrower’s formula payment lands above the cap. There is no relief to be had. Meanwhile RAP, the plan they get by default if they do nothing, would charge them $1,167 a month, because RAP takes a percentage of full income with no cap at all.
For this borrower the entire income-driven menu is either irrelevant or actively worse than the plan they are already on.
The honest caveat
Cheapest is not the same as possible. That $120,000 borrower “should” pay $1,364 a month by the total-cost math, on a $75,000 salary, before rent. If that payment is not achievable, the comparison is not Standard versus IBR. It is IBR versus delinquency, and IBR wins on that comparison every single time.
That is the real purpose of these programs. They exist so that a payment exists. Judging them purely on lifetime cost misses what they are for.
So what actually determines your answer
Three things, in this order:
Do you work in public service? If yes, the plan choice is worth tens of thousands of dollars, tax-free, and it is the highest-value decision in your financial life this year.
Is your balance large compared to your income? Roughly speaking, if you owe more than you earn, forgiveness may actually land, and the plan comparison matters a lot. If you owe much less than you earn, forgiveness will never arrive and the fastest reasonable payoff is usually cheapest.
Can you afford the Standard payment? If yes, and neither of the above applies, the Standard plan is frequently the cheapest thing available and it needs no application at all.
One warning that applies to everyone: RAP is now the default. It was the most expensive option in three of the five rows above. A default is a starting point that someone else picked, not a recommendation.
Run your own numbers
Every figure here came from the same engine we license to financial advisors, and you can run your own loans through it free. Nothing above substitutes for that, because the answer genuinely depends on your balance, your income, your family size, and your employer.
Compare your plans free at finology.tech.
Wondering whether this is a decision worth paying someone to get right? We worked through that math too: Is It Worth Hiring a Professional to Help With Student Loan Repayment?
Plan rules current as of August 2026. Enrollment in any federal repayment plan is free at studentaid.gov.
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