# How do you calculate discretionary income for student loans?

Contents

## How does student loan calculate discretionary income?

To calculate discretionary income for most student loan repayment plans, the Education Department:

1. Finds the correct federal poverty guideline for your location and family size.
2. Multiplies that number by 1.5.

## What is the formula to calculate discretionary income?

Take your disposable income, which is the amount of money after taxes left, for example, in your paycheck. Subtract all of your necessities like paying for rent or housing, student loans, utilities, and food, and whatever is left over to spend, save, or invest is your discretionary income.

## What is considered your discretionary income?

Discretionary income is the money you have left over from your post-tax income after paying for necessary expenses like rent, utilities and food.

## How does PAYE calculate discretionary income?

Discretionary income for the PAYE Plan is the difference between your annual income and 150% of the poverty guideline for your family size and state of residence.

## How do I calculate my adjusted gross income?

The AGI calculation is relatively straightforward. Using the income tax calculator, simply add all forms of income together, and subtract any tax deductions from that amount.

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## How do you calculate disposable income?

Subtract the tax amount from annual gross income

When you subtract the tax amount from the initial annual income, you get your disposable income, which can be used for spending or saving.

## What is the poverty line for student loans?

You have \$45,000 in Direct Unsubsidized Loan debt. The 2020 HHS Poverty Guideline amount for a family of one in the 48 contiguous states and the District of Columbia is \$12,760.

## How is discretionary income calculated IBR?

Generally, your monthly payments under Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE) are calculated as 10% or 15% of your “discretionary income”, which is your income minus 150% of the poverty level for your family size and state.

## What are considered discretionary expenses?

Discretionary expenses are often defined as nonessential spending. This means a business or household is still able to maintain itself even if all discretionary consumer spending stops. Meals at restaurants and entertainment costs are examples of discretionary expenses.

## How is IDR calculated?

The income-driven plan you use

10% of your discretionary income. 10% of discretionary income if you borrowed on or after July 1, 2014; 15% of discretionary income if you owed loans as of July 1, 2014. 20% of discretionary income or fixed payments over a 12-year term — whichever is less.

## Is discretionary income the same as AGI?

Instead of subtracting various allowances from total income, the income-driven repayment plans define discretionary income by subtracting a multiple of the poverty line from adjusted gross income (AGI).

## Is take home pay net or gross?

Gross pay is what employees earn before taxes, benefits and other payroll deductions are withheld from their wages. The amount remaining after all withholdings are accounted for is net pay or take-home pay.