1. What is Discretionary Income for IBR?

Discretionary income for Income-Based Repayment (IBR) plans is calculated as your adjusted gross income (AGI) minus 150% of the poverty guideline for your family size and state. This determines your monthly payment amount under IBR plans.

2. How Does the Calculator Work?

The calculator uses the standard IBR discretionary income formula:

Where:

• \( AGI \) — Your Adjusted Gross Income from tax returns
• \( Poverty\ Guideline \) — Federal poverty guideline for your family size

Explanation: The formula determines the portion of your income considered available for student loan payments after accounting for basic living expenses.

3. Importance of Discretionary Income Calculation

Details: Your calculated discretionary income directly affects your monthly payment amount under Income-Based Repayment plans, Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE) plans.

4. Using the Calculator

Tips: Enter your most recent AGI from your tax return and the appropriate poverty guideline 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 appears on line 11 of Form 1040 from your most recent federal tax return.

Q2: How do I determine the poverty guideline?
A: Use the federal poverty guidelines published annually by HHS, based on your family size and state of residence.

Q3: Is this calculation used for all income-driven plans?
A: Most income-driven plans use this calculation, though some newer plans may use slightly different multipliers.

Q4: How often should I recalculate this?
A: Recalculate annually when you renew your income-driven repayment plan certification.

Q5: Does this include spouse's income?
A: For married borrowers filing jointly, include combined AGI. For separate filers, rules vary by repayment plan.