How the engine actually calculates your plan
No black box. Here's every plan we model, the formula behind it, and the assumptions we make, so you can check our work and trust the verdict.
✓ Last reviewed June 2026 · verified against current U.S. Dept. of Education, IRS & HHS guidance · we re-check when the law changes
How the engine works, in four steps
Your real inputs
Loan balance and rate, income now and as an attending, training, employer, filing status and family size.
Month-by-month sim
We march every eligible repayment path forward one month at a time across your full trajectory.
Ranked by lifetime cost
Each path is scored by total out-of-pocket cost over its life, forgiveness, taxes and interest included.
The reasoning, shown
You see why your plan won, the assumptions used, and exactly what would flip the answer.
What we model
For your inputs, we run a month-by-month simulation of each repayment path available to you and rank them by total out-of-pocket cost over the life of the loan:
- Standard 10-year payoff, fixed amortization, the "just pay it" baseline.
- PSLF on RAP, 120 income-based payments at a qualifying employer, then tax-free forgiveness of the balance.
- PSLF on legacy IBR, same 120 payments, but capped at the 10-year Standard amount (only if you first borrowed before July 1, 2026).
- RAP to forgiveness, income-based payments toward 30-year forgiveness for borrowers not pursuing PSLF.
- Legacy IBR to forgiveness, capped payments toward 20-year forgiveness, where applicable.
- Private refinance, a fixed-rate private loan over the term you specify, which forfeits all federal benefits.
The formulas
Standard / refinance payment uses standard loan amortization: payment = balance × r ÷ (1 − (1 + r)⁻ⁿ), where r is the monthly rate and n is the number of months.
RAP payment follows the 2025 federal law's tiered schedule, 1% of total income for the lowest bracket scaling to 10% above roughly $100,000 of income, divided by 12, then reduced by $50 per dependent child, with a $10 monthly floor. RAP also waives unpaid interest each month, so balances don't grow from negative amortization.
Legacy IBR payment is 10% of discretionary income (income above 150% of the federal poverty line for your family size) divided by 12, and, critically for physicians, capped at the 10-year Standard payment. That cap is why high-earning attendings on legacy IBR often pay far less than they would on RAP.
PSLF assumes 120 qualifying monthly payments under a qualifying plan while you work full-time for a qualifying nonprofit or government employer, after which the remaining balance is forgiven and is not taxed federally.
Your income isn't static, and neither is our model. If you're a resident, we apply your training-years income first, then switch to your specialty-level attending income for the remaining months, because that trajectory is exactly what determines whether forgiveness or payoff wins.
Key assumptions
- Poverty guidelines use the 2025 figures for the 48 contiguous states and DC. Alaska and Hawaii are higher; we note this where relevant.
- Income-driven payments for single and married-filing-separately borrowers use only your income; married-filing-jointly includes spouse income. (The MFS lever can lower legacy IDR payments but usually raises taxes, model both with your CPA.)
- Specialty incomes are median estimates you can and should edit to match your actual offers.
- We don't model future statutory changes, employer-eligibility edge cases, state taxes on forgiveness, or one-off servicer errors.
Our sources & editorial standards
Every rule in our engine is built from primary government sources, not blog posts, not lender marketing. We cite only:
- U.S. Department of Education / studentaid.gov, repayment plans (RAP, IBR), PSLF rules, and the 120-payment requirement.
- The 2025 reconciliation law (OBBBA), which created the Repayment Assistance Plan and is sunsetting SAVE/PAYE/ICR.
- IRS guidance, for the federal tax treatment of forgiven balances (PSLF is tax-free; long-term IDR forgiveness is generally taxable).
- HHS poverty guidelines (2025), used in the income-driven discretionary-income formula.
Our editorial standard is simple: we model the rules as written, we show our math, we disclose our assumptions, and we update the engine as federal guidance is finalized. When we're uncertain, we say so and point you to the official source. We have no financial incentive to change your answer, refinance referrals are the only way we earn, and the engine surfaces refinancing as your lowest-cost path strictly when your own numbers favor it, telling PSLF candidates not to refinance even though we earn nothing in that case.
Engine last reviewed against federal rules: June 2026.
The legal basis for each calculation
Every plan we model traces to a federal statute or regulation. We model the rules as written; where 2026 implementing regulations are still being finalized by the Department of Education, we say so and follow its published guidance, updating the engine as the rules settle.
| Plan / rule | Primary authority |
|---|---|
| IBR — 10% (new borrower) / 15% (older), discretionary income, 10-year-Standard cap, 20/25-year forgiveness | 34 CFR § 685.221; Higher Education Act § 493C |
| ICR — being phased out by 2028 | 34 CFR § 685.209(b) |
| PAYE — being phased out by 2028 | 34 CFR § 685.209(a) |
| Repayment Assistance Plan (RAP) — 1–10% of total AGI, −$50/child, interest waiver, 30-year forgiveness | Higher Education Act as amended by the 2025 reconciliation law (P.L. 119-21); Dept. of Education implementing guidance (rulemaking in progress) |
| PSLF — 120 qualifying payments, qualifying employer, tax-free forgiveness | 34 CFR § 685.219; Higher Education Act § 455(m); IRC § 108(f)(1) |
| Standard 10-year amortization | 34 CFR § 685.208 |
| Discretionary income & poverty guidelines | HHS annual poverty guidelines; 34 CFR §§ 685.209, 685.221 |
| Tax treatment of forgiveness | IRC § 108(f)(1) excludes PSLF permanently; the temporary exclusion for other forgiveness (ARPA § 9675) expired Dec. 31, 2025, so long-term IDR forgiveness is federally taxable again |
Note: RAP was created by 2025 legislation and its implementing regulations are still being written. Where a RAP detail is not yet final, we follow the Department of Education’s current guidance and flag the uncertainty rather than presenting it as settled.
Changelog
| Date | Change |
|---|---|
| June 2026 | Added the new-borrower vs. older-borrower IBR split (10% / 20-year vs. 15% / 25-year, based on whether you first borrowed before July 1, 2014). Added RAP modeling, a RAP↔IBR hybrid for PSLF candidates, grandfathering logic for borrowers already on PAYE/ICR (with 2028 sunset warnings), and a “should I consolidate?” decision check. Reflected the end of SAVE and the return of federally taxable long-term IDR forgiveness. |
| Earlier 2026 | Initial engine: month-by-month lifetime-cost simulation of Standard, legacy IBR, PSLF, and private refinance, ranked by total out-of-pocket cost with forgiveness, taxes, and interest included. |
What we don't do
We don't sell your data, we don't take custody of your money, and we are not your investment adviser or fiduciary. The output is an educational estimate to help you ask better questions, not a directive. The 2026 rules are new and still being implemented by the Department of Education and servicers, so always verify specifics at studentaid.gov and confirm major decisions with a qualified advisor.