Calculate Your Discretionary Income for IDR Plans

Determine your monthly student loan payments on income-driven repayment plans — even the newest.
By NerdWallet 
Edited by Karen Gaudette Brewer

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

If you’re struggling to afford federal student loan payments, you may be able to lower them with an income-driven repayment plan. Your new monthly payment will be capped at 5%, 10%, 15% or 20% of your discretionary income, depending on the plan. Your eligibility will depend on the type of federal loan you have.

Use the top calculator to estimate payments under existing income-driven repayment plans.

To calculate payments under the Education Department's newest income-driven replacement plan, dubbed SAVE, use the second calculator. The new plan caps repayment of your discretionary income at 5% — starting July 2024 for undergraduate borrowers. SAVE also redefines discretionary income.

This new payment plan uses 225% of the poverty line for your family size in payment calculations instead of 150% — leading to lower discretionary income and monthly payments.

Income-based repayment calculator for existing plans

New income-driven repayment plan calculator

Discretionary income explained

Discretionary income matters for federal student loans because the Education Department uses it to calculate payments for income-based repayment and other income-driven plans. By accounting for your necessities, discretionary income helps determine how much you could reasonably pay each month. If yours is low enough, your payment may be reduced to $0 a month.

Of course, people have different needs — or things they consider needs. The government isn’t going to have borrowers submit receipts and defend their spending choices. Instead, it uses a standardized discretionary income definition to make things as fair as possible.

Simplify your student loan refinancing with Sparrow
Pre-qualify and compare rates with 17+ lenders to refinance your student loans through a single form in as little as three minutes.

powered by

How is discretionary income calculated?

To calculate discretionary income for most student loan repayment plans, the Education Department:

  • Finds the correct federal poverty guideline for your location and family size.

  • Multiplies that number by 1.5.

  • Subtracts that number from your adjusted gross income.

Income-Contingent Repayment, which sets payments at 20% of discretionary income, uses 100% of the poverty line instead of 150%.

Adjusted gross income is the amount you pay taxes on. You’ll find it on your most recent tax return on Line 11 if you filed Form 1040; or Line 1 on 1040-ES.

Other student loan calculators

Student loan refinance calculator: Compare your current loan payment or multiple payments with a refinanced student loan.

Student loan consolidation calculator: Compare your payments under federal loan consolidation plans with your current bills.

Parent PLUS loans calculator: Estimate your monthly payments on federal direct PLUS loans.

Daily student loan interest calculator: Estimate the amount of interest that your loan accrues daily and between payment periods.

Weighted average interest rate calculator: Determine what the average rate on your current loans is.

Student loan calculator: Determine the monthly payment on new student loans you take out, federal or private.

» See more NerdWallet's loan calculators

Spot your saving opportunities
See your spending breakdown to show your top spending trends and where you can cut back.