Discretionary income, explained
The number that sets your IBR payment - and why RAP is different.
Discretionary income for Income-Based Repayment (IBR) is your AGI minus 150% of the HHS poverty guideline for your family size and state. IBR charges 10% of it (15% for borrowers from before July 2014), divided by 12. For a single filer in the 48 contiguous states, the protected amount is $23,475 in 2025. Note: the new RAP plan uses total AGI, not discretionary income. General information, not advice.
Source: HHS / ASPE 2025 Poverty Guidelines. Data as of June 2026.
General information, not financial or legal advice. Federal student loan rules are changing in 2025-2026 under the One Big Beautiful Bill Act - figures here are estimates from public sources and the final program rules are still being implemented. Always verify with your loan servicer and studentaid.gov. See our disclaimer.
Worked examples (single filer, 48 contiguous states)
| AGI | 150% guideline (protected) | Discretionary income | Est. new-IBR payment (10%) |
|---|---|---|---|
| $40,000 | $23,475 | $16,525 | $137.71 |
| $55,000 | $23,475 | $31,525 | $262.71 |
| $70,000 | $23,475 | $46,525 | $387.71 |
| $90,000 | $23,475 | $66,525 | $554.38 |
Source: HHS / ASPE 2025 Poverty Guidelines. Data as of June 2026.
Before the 10-year Standard cap. Uses the 2025 poverty guideline. Estimate only.
Frequently asked questions
What is discretionary income for student loans?
For IBR, discretionary income is your AGI minus 150% of the HHS poverty guideline for your family size and state. For a single filer in the 48 contiguous states, 150% of the 2025 guideline is $23,475; income above that is discretionary, and IBR charges 10% (or 15% for older borrowers) of it.
Does RAP use discretionary income?
No. RAP, the new 2026 plan, uses your total adjusted gross income (AGI) on a 1-10% sliding scale - it does not subtract a poverty-guideline amount. Discretionary income applies to IBR and the legacy income-driven plans.
How does family size change discretionary income?
A larger family raises the poverty guideline, so 150% of it (the protected amount) is higher and your discretionary income - and therefore your IBR payment - is lower. Use the IBR calculator to see the effect.
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Last updated: 2026-06-22