# Calculate Student Loan Repayment Income Based

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## Calculate Student Loan Repayment Income Based

The federal government has created a number of ways for borrowers to repay their student loans. The standard repayment plan will lower your monthly payments and extend the life of your loan, but it may also result in more money spent over time. If you want to pay off your loans as quickly as possible or you’re struggling with high interest rates, consider switching to one of these income-based repayment plans:

### Under the income-based repayment plan, your monthly payments are calculated as a percentage of your discretionary income.

If you’re a new borrower on or after July 1, 2014, the income-based repayment (IBR) plan will set your monthly payment at 15% of your discretionary income. Your monthly payment under IBR may be less than it would be under the 10-year Standard Repayment Plan, but any amount you pay toward loans is better than nothing at all.

Under the IBR plan, your monthly payments are calculated as a percentage of your discretionary income. Discretionary income is calculated by subtracting 150% of the poverty guideline for your family size and state of residence from your adjusted gross income (AGI). If you have no AGI because you’re unemployed or not working full time, then use zero as an estimate for AGI in this calculation. For example:

• \$10K annual salary + \$5K annual bonus = \$15K total annual income before taxes
• \$15K x 0.2 = 3K/\$30K = 11% debt-to-income ratio

### Your payment will be 15% of your discretionary income if you’re a new borrower on or after July 1, 2014, and not a new borrower on or after July 1, 2014.

Your payment will be 15% of your discretionary income if you’re a new borrower on or after July 1, 2014, and not a new borrower on or after July 1, 2014.

Discretionary income is calculated by subtracting 150% of the poverty guideline from adjusted gross income. This amount is then multiplied by 12%, which is the percentage at which your loan servicer charges interest. The result is your monthly payment. For example:

If you have an adjusted gross income of \$32,000, then 150% of that number (150% x 32k = 48k) would be \$48,000 and 48k – 32k = 16k; 16k x .12 = \$1,920 (you’ll pay 15%). You can change this payment amount if you make more money or have changes in family size (such as marriage).

### To calculate your discretionary income, subtract 150% of the poverty guideline for your family size and state of residence from your adjusted gross income.

To calculate your discretionary income, subtract 150% of the poverty guideline for your family size and state of residence from your adjusted gross income.

You can find the poverty guidelines on the U.S. Department of Health and Human Services website.

For example, if you’re single in New York City with an adjusted gross income of \$40,000 a year and a family size of one (you), you’ll have about \$18,000 in discretionary income.

### The chart below shows multiples of the federal poverty guidelines for each state and household size. (Use the chart for the state you live in).

The chart below shows multiples of the federal poverty guidelines for each state and household size. (Use the chart for the state you live in).

• Note: Federal poverty guidelines are used to determine eligibility for certain benefits and programs, but they’re not meant to reflect what families actually spend on food and other necessities. In fact, many families can’t afford these costs and are forced to cut back their spending on basic necessities like food or medicine.
• Additionally, federal poverty guidelines may not be accurate because they don’t reflect differences in geographic cost-of-living from place to place. For example, if you live in San Francisco where housing costs are high relative to other areas of California, then your FPL would be higher than if you lived somewhere else in California where housing is cheaper.*

Federal Poverty Limit Multipliers By Size of Household And State Of Residence (Updated annually)

• Note: The following tables show multiples of federal poverty level guidelines according to household size within each state; this will allow users who do not know their state’s exact FPL value based on their income level find out how much they would qualify for under certain repayment plans based off that amount.*

### If it’s not listed, please enter ‘Not Listed’ below.

• If it’s not listed above, enter “Not Listed” in the box labeled “Does your income…”
• For all other questions, please refer to the chart below.

### There are a number of ways to repay student loans

• There are a number of ways to repay student loans:
• You can make monthly payments based on your income.
• You can apply for income-based repayment at studentloans.gov, which will cap your monthly payment at 15% of your discretionary income (the difference between 150% and the poverty line), and forgive remaining debt after 25 years.
• Or you can apply for income-contingent repayment, which bases monthly payments on 10% of the difference between 150% and the poverty line, with any remaining loan forgiven in 20 years.
• You may also be eligible for other plans that are designed to keep monthly payments low — such as income sensitive repayment or consolidated debt forgiveness — but these programs have different eligibility requirements than standard plans like PAYE/IBR or ICR listed above

This is a very important part of the process, so make sure to calculate your income carefully. If you are not sure about how to do this or have any questions, contact your loan servicer for help. The more you know about your repayment options, the better able you’ll be able to choose one that’s right for you!