Discretionary Income Calculator

Background.

On an income-driven federal student loan plan, your payment does not come from your balance or interest rate. It comes from discretionary income: your adjusted gross income minus a protected amount set at a multiple of the federal poverty guideline for your household. Only the part above that line is charged, at a fixed percentage.

Three plans still work this way, and they differ in two numbers. Pay As You Earn (PAYE), and Income-Based Repayment (IBR) for anyone who was a new borrower on or after July 1, 2014, protect 150% of the poverty guideline and take 10% of what is left each year. IBR for earlier borrowers protects the same 150% but takes 15%. Income-Contingent Repayment (ICR) protects only 100% of the guideline and takes 20%. On the same income those differences are large: a single borrower with $50,000 of AGI owes an illustrative $2,606 a year under PAYE, $3,909 under the original IBR and $6,808 under ICR.

The guidelines used are the 2026 figures published by the Department of Health and Human Services, effective January 13, 2026. They rise with family size, and Alaska and Hawaii have their own, higher tables, so a larger household or a move to either state raises the protected amount and lowers the payment.

Two plans are left out on purpose. SAVE was blocked in litigation and is being discontinued. The Repayment Assistance Plan, which replaced it on July 1, 2026, charges a percentage of AGI itself rather than of discretionary income, so there is nothing for this formula to compute. Rules on who may still enrol in each plan have been changing, and your servicer's figure, built from your certified income and loan details, is the one that counts; the payment shown here is an illustration of the plan formula, not a bill.

What is discretionary income calculator?

Discretionary income, for federal student loans, is adjusted gross income minus a protected amount equal to 150% or 100% of the HHS poverty guideline for your family size and state group, and never less than zero. The poverty guideline is a single dollar figure for each household size, published every year. Each income-driven plan then charges a fixed share of the discretionary income per year, recalculated when you recertify your income, which is normally once a year. It is a different idea from the everyday meaning of discretionary income, which is what is left after essential bills.

How to use this calculator.

1. 01Enter your AGI from the federal tax return your servicer will use, normally the most recent one, rather than an estimate from current pay.
2. 02Enter your family size: you, a spouse if you have one, and others who meet your servicer's definition, which generally means the people you support as dependents.
3. 03Choose your state group. Borrowers in Alaska and Hawaii should pick their state, because the guidelines there are higher.
4. 04Choose your plan: PAYE or post-2014 IBR at 10%, original IBR at 15%, or ICR at 20%. If you are unsure which IBR you have, your loan servicer can tell you.
5. 05Read discretionary income first, then the illustrative annual and monthly payments, and compare plans by switching the selection.

The formula.

The guideline for your household is a base amount plus a fixed sum for each person after the first. For 2026 that is $15,960 plus $5,680 per extra person in the 48 contiguous states and DC, $19,950 plus $7,100 in Alaska, and $18,360 plus $6,530 in Hawaii. A family of four in the contiguous states therefore has a guideline of $15,960 + 3 × $5,680 = $33,000.

The protected amount is that guideline times the plan's multiple: 1.5 for PAYE and both versions of IBR, 1.0 for ICR. Discretionary income is AGI minus the protected amount, set to zero if the result would be negative. The illustrative annual payment is discretionary income times 10%, 15% or 20%, depending on the plan, and the monthly figure divides that by 12.

Two things move the result most at the margin. Under PAYE, every extra $1,000 of AGI adds $100 a year to the payment, and every extra family member in the contiguous states raises the protected amount by $8,520 and cuts the payment by $852 a year, about $71 a month, while discretionary income stays above zero.

Real payments can be lower than this formula gives. IBR and PAYE payments are capped at what the borrower would have paid on the 10-year standard plan, and ICR charges the lesser of 20% of discretionary income or an amount based on a 12-year repayment schedule adjusted for income. Both of those depend on your loan balance and interest rate, which are not entered here.

A worked example.

Frequently asked questions.

References& sources.

1. [1]U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation (2026). Poverty Guidelines, effective January 13, 2026.
2. [2]Federal Student Aid, U.S. Department of Education — Income-Driven Repayment (IDR) Plans.
3. [3]Congressional Research Service — The Repayment Assistance Plan (RAP) in the FY2025 Reconciliation Law.