Discretionary Income Calculator (US student loans: IBR, PAYE, ICR)

Understanding the discretionary income calculator for student loans — concept and principle

This calculator finds discretionary income as defined for US federal student loan income-driven repayment (IDR) plans, and the income-based monthly payment for IBR, PAYE or ICR. It uses the 2026 HHS poverty guidelines for your family size and state. Use it to estimate payments before applying for an IDR plan or recertifying income.

Only income above 150% of the HHS poverty guideline counts; 10% of it, spread over 12 months, is the payment.

How it is calculated

Discretionary income = AGI − protected income, never below 0.
Protected income = 150% of the poverty guideline (IBR, PAYE) or 100% (ICR).
2026 guidelines: $15,960 for one person plus $5,680 for each extra person (48 states and DC); Alaska $19,950 + $7,100; Hawaii $18,360 + $6,530.
Monthly payment = payment share × discretionary income ÷ 12: 10% (IBR new borrowers, PAYE), 15% (IBR earlier borrowers) or 20% (ICR).

Payment caps and other plan rules are not applied.

The principle

Income-driven repayment ties student loan payments to what a borrower can afford. The protected amount, a multiple of the federal poverty guideline, is treated as needed for basic living costs; only income above it is "discretionary" and subject to the payment share. Larger families have higher guidelines and so more protected income. Alaska and Hawaii have higher guidelines because of higher living costs.

Worked example

Default inputs: AGI $55,000, family of 1, 48 states, IBR new borrower.

Poverty guideline = $15,960.
Protected income = 1.5 × 15,960 = $23,940.
Discretionary income = 55,000 − 23,940 = $31,060 a year, about $2,588 a month.
Payment share = 10%.
Income-based payment = 10% × 31,060 ÷ 12 ≈ $259 a month.

Each point is the calculator re-run with only “Adjusted gross income (AGI) per year (USD)” changed; the gold point is the default example. Change the inputs above and this chart follows your numbers.

Adjusted gross income (AGI) per year (USD)	Discretionary income per year (USD)
13,750	0
27,500	3,560
41,250	17,310
55,000	31,060
68,750	44,810
82,500	58,560
110,000	86,060

How to read the result

The payment shown is the income-based amount; IBR and PAYE never charge more than the 10-year standard payment, so your actual payment may be lower. A discretionary income of 0 means a $0 payment under these plans. Plan availability and rules have changed several times, so confirm the current options with your loan servicer.

Common mistakes

Using gross pay instead of adjusted gross income.
Using last year's poverty guideline.
Forgetting to count all household members in family size.
Assuming every borrower qualifies for every plan.

Keep in mind: Federal student loan rules change; some plans may be closed to new borrowers. Check with your servicer or studentaid.gov. This is not financial advice.

Frequently asked questions

What is discretionary income for student loans?

AGI minus a protected amount based on the poverty guideline for your family size and state.

Why is the IBR threshold 150%?

The rules protect 150% of the poverty guideline for IBR and PAYE, leaving the rest as discretionary.

Can my payment be $0?

Yes, if your AGI is at or below the protected amount.

Sources: 34 CFR § 685.209 (Income-driven repayment plans) · HHS, "Annual Update of the HHS Poverty Guidelines", Federal Register Vol. 91, No. 10 (15 Jan 2026)

Checked 9 Nov 2026. Discretionary income and payment shares: 34 CFR §685.209 (Income-driven repayment plans), Code of Federal Regulations, 2025 edition (govinfo). Poverty guidelines: HHS, “Annual Update of the HHS Poverty Guidelines”, Federal Register Vol. 91, No. 10 (15 Jan 2026).

Your numbers