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Ryan Lane is an editor on NerdWallet’s small-business team. He joined NerdWallet in 2019 as a student loans writer, serving as an authority on that topic after spending more than a decade at student loan guarantor American Student Assistance. In that role, Ryan co-authored the Student Loan Ranger blog in partnership with U.S. News & World Report, as well as wrote and edited content about education financing and financial literacy for multiple online properties, e-courses and more. Ryan also previously oversaw the production of life science journals as a managing editor for publisher Cell Press. Ryan is located in Rochester, New York.
Cecilia Clark is an editor on the insurance team. She specializes in auto insurance and manages product reviews and roundups. Previously, she worked as a freelance writer and developed communications strategies for cybersecurity firms. Cecilia has also worked in post-secondary education, elevator operations management and sales and military nuclear command control, maintenance management and public affairs.
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It’s easy to feel like you can’t afford your student loan payments. The federal government determines whether that’s the case by seeing if you have what’s known as a partial financial hardship.
Demonstrating a partial financial hardship is required to enroll in the Income-Based Repayment (IBR) or Pay As You Earn (PAYE) income-driven repayment plans. Use this calculator to estimate if you meet this requirement for either plan.
Partial financial hardship calculator
What is a partial financial hardship?
Having a partial financial hardship means that your student loan bills are too high for your income, relatively speaking. In practical terms, it means you would pay less each month in an income-driven repayment plan than the standard repayment plan.
To determine if you have a partial financial hardship, your servicer will calculate your monthly payment under the standard plan as well as IBR and PAYE and then compare them.
If you’d pay more under the standard plan, you have a partial financial hardship and would qualify for IBR and/or PAYE, provided you meet the specific plan’s other eligibility criteria.
Payments under all income-driven plans are generally a percentage of your discretionary income.
For IBR and PAYE plans, the federal government calculates your discretionary income as the difference between your adjusted gross income (AGI) and 150% of the poverty line for your family size and state.
When determining whether you have a partial financial hardship, your servicer will use the following percentages:
10% of your discretionary income for PAYE.
15% of your discretionary income for IBR.
Your payments under IBR would be 10% of your discretionary income if you were a new borrower as of July 1, 2014. However, 15% is the threshold for all borrowers when calculating partial financial hardship for IBR.
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NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
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NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
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NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
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NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
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NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
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NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
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NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
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NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
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NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
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NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
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NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
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NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
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NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
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NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
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Some income-driven repayment plans don’t require a partial financial hardship to enroll. Most notable is Saving on a Valuable Education, or SAVE, which also limits payments to 10% of your discretionary income. That rate will drop to 5% for undergraduate borrowers starting summer 2024.
But if you opt for IBR or PAYE, you must continue displaying a partial financial hardship when you recertify your income and family size every year. If you lose this designation, your payments will stop being based on your income and unpaid interest will be capitalized, or added to your balance, increasing the amount you owe.
To avoid these additional costs, think about long-term fit when deciding which income-driven plan is right for you. In general, IBR and PAYE are best for borrowers who don’t expect their income to rise much in the future, as well as those with grad school debt. SAVE is better for borrowers with higher earning potential who don’t qualify for PAYE.
