1. What is Discretionary Income for Student Loans?

Discretionary income for student loan repayment purposes is defined as your adjusted gross income (AGI) minus 150% of the poverty guideline for your family size and state of residence. This calculation is used to determine income-driven repayment plan amounts.

2. How Does the Calculator Work?

The calculator uses the standard discretionary income formula:

Where:

• \( AGI \) — Adjusted Gross Income in USD
• \( Poverty\ Line \) — Federal poverty guideline amount for your family size and state

Explanation: This calculation determines the portion of your income that can be used for student loan payments under income-driven repayment plans.

3. Importance of Discretionary Income Calculation

Details: Your discretionary income directly affects your monthly payment amount under income-driven repayment plans like IBR, PAYE, REPAYE, and ICR.

4. Using the Calculator

Tips: Enter your most recent AGI from your tax return and the appropriate poverty guideline amount for your family size. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Where do I find my AGI?
A: Your AGI can be found on line 11 of your IRS Form 1040 from your most recent tax return.

Q2: How do I determine the poverty guideline?
A: Poverty guidelines are published annually by the U.S. Department of Health and Human Services and vary by family size and state.

Q3: Why is 150% of the poverty line used?
A: Federal regulations define discretionary income for student loans as income above 150% of the poverty guideline.

Q4: Does this calculation apply to all repayment plans?
A: No, this specific calculation is only used for income-driven repayment plans, not standard or graduated repayment plans.

Q5: How often should I recalculate this?
A: You should recalculate whenever your income changes significantly or annually when you renew your income-driven repayment plan.