How is Discretionary Income Calculated?
When deciding to make the switch to an Income-Based or Income-Driven Repayment Plan, you will find that your discretionary income is what is being used to determine your monthly amounts as well as your potential for loan forgiveness.
First, it's important to know what this income is referring to. Discretionary income is the amount of income that is left for spending, investing, or saving after paying taxes and paying for things such as food, shelter, and clothing.
In order to calculate this for yourself, you will need to take your adjusted gross income (AGI) from your most recent tax filing and subtract it from 150% of the poverty guideline for your family size. You can see these amounts below:
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