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Calculate Your Discretionary Income for IDR Plans
Determine your monthly student loan payments on income-driven repayment plans — even the newest.
NerdWallet writers and editors are experts in their field and come from a range of backgrounds in journalism and finance. We adhere to the highest editorial standards to ensure our readers have the information necessary to make financial decisions with confidence.
Des Toups Lead Assigning Editor | Student loans, repaying college debt, paying for college
Des Toups was a lead assigning editor who supported the student loans and auto loans teams. He had decades of experience in personal finance journalism, exploring everything from car insurance to bankruptcy to couponing to side hustles.
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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.
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
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.
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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.