IBR is the best option if you plan on a career in public service and expect to have full loan forgiveness under the Public Service Loan Forgiveness (PSLF) program. I have a finance background and have analyzed a lot of the nuances.
Did you know you could have an IBR payment of zero dollars? Obviously, if you want to get PSLF after 10 years and have a zero payment, just make a payment of $1 per month and after 10 years all loan balances AND accrued interest goes POOF!
So first of all, you need to know exactly how IBR is calculated. IBR is 15% of your Adjusted Gross Income (AGI) MINUS 150% of the Federal Poverty Level for your family size. (For loans originating in 2014+ it is only 10%.)
AGI is a key number because you can actually do many things to lower your AGI such as contribute the maximum to 401(k) type savings plans, IRAs, Flexible Spending Plans (if needed). On top of all that, student loan interest is deducted from AGI. So let's say you earn $100K per year but put $16,500 for 401(k), $5,000 for your non-working spouse's IRA, plus $2,500 for Flexible Spending Plans. Let's say you paid $6,000 in student loan interest last year. Now your AGI just got chopped to $70,000.
If you get married and start a family with say 2 kids, your Federal Poverty Level is $22,050 so 150% of this would be $33,075.
Thus your annual IBR is 15% x ($70,000 - $33,075) which is $5,543.
Now compare this to just the interest expense on your $260K of student loans at avg interest rate of 7.4%. Interest accrued would be a whopping $19,240! But you only pay $5,543! The difference of course will be accrued in most cases but do you care?
Because after 10 years, even if your loan balance and accrued interest grows to one million or more, it is ALL forgiven!
So in 10 years you may have made just $55K of loan payments on $260K of debt and wind with no further payments. It is a pretty good deal if you plan on staying in public service for 10 years. In many cases, it can be as good or better than private sector work but it all depends of course on how your career progresses.