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Discretionary Income
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Estimate your monthly federal student loan payment under an income-driven repayment plan.
$0
Discretionary Income
$0
Annual Payment
$0
Subtract a poverty-line-based exemption (based on family size) from your Adjusted Gross Income to get discretionary income, then apply your plan's percentage (commonly 10%) and divide by 12 for a monthly payment.
Monthly Payment = (AGI − Poverty Exemption) × Discretionary % ÷ 12
Income-driven repayment (IDR) plans tie federal student loan payments to a borrower's income and family size rather than the loan balance, so payments stay proportional to what a borrower can actually afford. Instead of a fixed amortization schedule, the payment recalculates annually as income and family size change, and it can drop to $0 for borrowers with income below the exemption threshold.
Discretionary income is generally calculated as Adjusted Gross Income (AGI) minus a percentage of the federal poverty guideline for your family size and state. This exemption amount rises with family size, meaning larger households need higher income before any payment is required. The specific poverty-guideline percentage and payment percentage vary by plan and can change with federal policy updates.
The federal government has offered several IDR plans over time (Income-Based Repayment, Pay As You Earn, Income-Contingent Repayment, and newer plans like SAVE), each with different discretionary income percentages, payment caps, and forgiveness timelines. Because plan availability and terms change with policy, this calculator provides a simplified estimate; confirm current, plan-specific terms at studentaid.gov before making decisions.
Most IDR plans forgive any remaining loan balance after a set number of years of qualifying payments, commonly cited as 20 years for undergraduate loans and 25 years for graduate loans, though exact terms depend on the specific plan and have shifted with recent policy changes. Forgiven amounts have historically sometimes been treated as taxable income, so it's worth understanding the tax implications of your specific plan.
Discretionary income is generally your Adjusted Gross Income minus a poverty-line-based exemption amount that scales with family size. Most income-driven repayment plans then calculate your monthly payment as a percentage of that discretionary income.
This varies by plan, historically ranging from 10% to 20% of discretionary income depending on the specific income-driven repayment plan and loan type. Always confirm current percentages on the official Federal Student Aid website, since plan terms change.
Most income-driven repayment plans forgive remaining balances after a set number of years of qualifying payments, commonly 20-25 years, though this varies by plan and has changed with policy updates, so always verify current terms with your loan servicer.
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