Student Loan Discretionary Income Calculator
Calculate the income used to determine your IDR payments for federal student loans.
Income Allocation Visualization
What is a Student Loan Discretionary Income Calculator?
A student loan discretionary income calculator is a financial tool used to determine the portion of a borrower's income that the federal government considers "available" for student loan payments. Unlike the standard definition of discretionary income (income remaining after all bills), the Department of Education uses a specific formula based on the Federal Poverty Guidelines.
Who should use it? Any borrower enrolled in or considering an Income-Driven Repayment (IDR) plan like SAVE, PAYE, or IBR should use a student loan discretionary income calculator. A common misconception is that discretionary income is simply what you have left in your bank account at the end of the month; however, for federal loans, it is strictly a math-based formula regardless of your actual rent or grocery costs.
Student Loan Discretionary Income Calculator Formula
The mathematical calculation for discretionary income is standardized but varies slightly based on your chosen repayment plan. The core formula used by this student loan discretionary income calculator is:
Variables and Typical Ranges
| Variable | Meaning | Unit | Typical Range |
|---|---|---|---|
| AGI | Adjusted Gross Income | Currency ($) | $15,000 – $250,000+ |
| Family Size | Number of household members | Count | 1 – 10+ |
| Poverty Guideline | HHS annual poverty limit | Currency ($) | $15,060+ (varies by state) |
| Percentage | Protection threshold (150% or 225%) | Multiplier | 1.5 to 2.25 |
Caption: These variables are the foundation of every student loan discretionary income calculator used for federal loan assessment.
Practical Examples (Real-World Use Cases)
Example 1: Single Professional in Chicago
John has an AGI of $60,000, lives alone (Family Size 1), and is on the SAVE plan. The poverty guideline for a single person is $15,060. The SAVE plan protects 225% of that amount ($33,885). Using the student loan discretionary income calculator, John's annual discretionary income is $60,000 – $33,885 = $26,115. His monthly payment (at 10%) would be roughly $217.
Example 2: Family of Four in Texas
Sarah has an AGI of $80,000 and a family size of 4. The poverty guideline is $31,200. On the older IBR plan (150% protection), the protected amount is $46,800. The student loan discretionary income calculator shows her discretionary income as $33,200 annually, resulting in a monthly payment of approximately $276.
How to Use This Student Loan Discretionary Income Calculator
- Enter your AGI: Locate this on your 1040 tax form. This is your income after certain deductions but before taxes.
- Specify Family Size: Include yourself, your spouse (if filing jointly), and any children or dependents you provide more than half the support for.
- Select State: Choose your residence, as Alaska and Hawaii have higher poverty thresholds.
- Choose Plan: Select SAVE for the 225% threshold or IBR/PAYE for the 150% threshold.
- Review Results: The student loan discretionary income calculator will instantly display your annual and monthly discretionary amounts.
Key Factors That Affect Student Loan Discretionary Income Calculator Results
- Income Fluctuations: If your AGI increases due to a promotion, your discretionary income rises dollar-for-dollar.
- Family Size Changes: Adding a dependent increases the poverty threshold, which lowers your discretionary income and your payment.
- Inflation Adjustments: The Department of Health and Human Services updates poverty guidelines annually, usually in January.
- State of Residence: Living in Alaska or Hawaii provides a higher "income floor," benefiting borrowers in those states.
- Tax Filing Status: Filing "Married Filing Separately" can exclude a spouse's income from the student loan discretionary income calculator.
- Plan Thresholds: The jump from 150% (older plans) to 225% (SAVE) significantly reduces the discretionary income for most borrowers.
Frequently Asked Questions (FAQ)
No. Disposable income is usually total income minus taxes. Discretionary income for student loans is AGI minus a specific percentage of the poverty guideline.
No, it uses Adjusted Gross Income (AGI) from your tax returns, which is a pre-tax figure after specific "above-the-line" deductions.
Guidelines are updated every year by the Department of Health and Human Services (HHS).
Yes. If your income is below the protection threshold (e.g., $33,885 for a single person on SAVE), your discretionary income is $0, and your payment is $0.
Generally yes, if you file taxes jointly or if they live with you and receive support.
The SAVE plan uses 225% of the poverty line as a buffer, whereas others use 150%. This protects more of your income from being considered "discretionary."
If you live abroad and use the Foreign Earned Income Exclusion, your AGI might be $0, making your results on a student loan discretionary income calculator also $0.
No. Private lenders do not use federal discretionary income formulas; they use their own debt-to-income (DTI) requirements.
Related Tools and Internal Resources
- Student Loan Repayment Estimator – Compare all federal repayment plans side-by-side.
- IDR Plan Eligibility – Find out which income-driven plans you qualify for based on loan type.
- Income-Driven Repayment Calculation – A deep dive into the math behind monthly payments.
- SAVE Plan Payment Calculator – Specific tool for the latest Saving on a Valuable Education (SAVE) plan.
- Federal Student Loan Forgiveness – Learn how discretionary income leads to loan discharge.
- Public Service Loan Forgiveness Eligibility – Guidance for non-profit and government employees.