Student Loan Forgiveness Calculator – Calculate PSLF & IDR Forgiveness | SoCalSolver

The PSLF calculation is straightforward: 120 qualifying monthly payments (non-consecutive) while employed full-time in a qualifying position (government agency, 501(c)(3) nonprofit, or military). The critical metric is employment sector and payment count, not the amount paid monthly. This creates a counterintuitive benefit: lower monthly payments (achieved through income-driven repayment plans) mean minimal principal reduction, more interest accrual, and larger balance remaining for forgiveness at the 120-payment mark.

Income-Driven Repayment (IDR) monthly payments are calculated using the formula: (Adjusted Gross Income - Poverty-Guideline-Adjusted Threshold) × Payment Percentage ÷ 12. The poverty guideline is 150% for SAVE/PAYE/REPAYE plans, 100-200% for IBR and ICR. Payment percentages range from 5% (SAVE plan, newest) to 20% (ICR). SAVE (2024) is most favorable with 5-10% rates and built-in interest accrual suspension if you pay the calculated minimum. Family size matters: a family of 4 has a higher poverty guideline threshold than a single borrower, resulting in lower discretionary income and lower payment.

Tax treatment differs critically between pathways: PSLF forgiveness is tax-free under current statute. IDR forgiveness at the 20-25 year mark has historically been treated as cancellation of debt income and potentially taxable; however, statutory and administrative changes may change tax treatment. This calculator provides an estimated tax liability field for IDR forgiveness scenarios — treat the estimate as illustrative and consult a tax professional before relying on it.

Loan consolidation rules affect PSLF eligibility: Direct Loans are immediately eligible for PSLF. FFEL and Perkins loans must be consolidated into a Direct Consolidation Loan to become PSLF-eligible. Consolidation can reset the 120-payment counter. Strategic timing of consolidation matters; consult your servicer and consider employer certification history before consolidating.

Interest accrual calculations use standard amortization formulas with monthly compounding at the stated annual interest rate. During income-driven repayment, monthly interest accrual may exceed monthly payment amounts, causing negative amortization if interest capitalizes. SAVE plan includes interest accrual protections for many borrowers; verify specifics with Federal Student Aid or your servicer.