The married student loan borrowers may found the unexpected reason for celebration. U.S. Department of Education, on April 16, 2025, officially retracted a proposed rule that, if came into effect, could raise monthly payments for many couples. The new clarification implies that spousal income will usually be non-accountable in certain cases which, in turn, will lead to a smaller number of student loan bills for some.
An update of the rules will benefit the borrowers of income-driven repayment (IDR) plans like IBR, PAYE, and ICR. These plans gauge your monthly payment to your income and the size of the family. An error or a misunderstanding in the calculation of the income can change your loan payments significantly.
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So, what are the changes, and how could they help you in reality?
What Was the Change in April 2025?
At the beginning of this year, the U.S. Department of Education made a court declaration in which it was said that spousal income was part of the IDR plans, regardless of the way, the borrower filed taxes. This would have had a considerable impact, perhaps it would have meant a rise for tens of thousands of loans of married borrowers.
However, the Department of Education came up with the amended declaration later in the week in which they stated that in case taxes are filed separately, then, spousal income will not be included in the calculation of IDR payments. This revocation has reverted the policy to the same state as was before the SAVE plan came into being.
The clarification was made in connection with a federal court injunction which stopped parts of the Biden administration’s SAVE repayment plan.
The Implications of This for Debtors
If you’re married and acquiring higher-education-related debt, paying back the loans under an income-driven repayment (IDR) plan means you will be obligated to a payment amount that is determined by two factors:
- Your adjusted gross income (AGI)
- Your family size
With the rightly interpreted regulation, single-filing taxpayers will be individually evaluated for their payments based exclusively on their earnings. The spouse’s income will be not counted towards the calculation, and therefore a lower AGI is likely as well as a slimmer monthly payment.
However, if you and your spouse are living separately and under the filing status of married, your spouse is still counted in the family size. This change brings about an increase in the income threshold which the couple can earn before having to pay more. Consequently, it decreases the total monthly amount that one has to pay.
This double-sided advantage may bring significant savings every month to certain couples who are married.
Who Is More Likely to Get the Most Out of This?
This modification is much needed namely for:
- Married borrowers who have a significantly lower income than their partner
- Two partners, where one either takes care of the family and is not employed or has a low income
- Parents of children, who have got more people in the family size, as they now are eligible to count their kids
One of our readers Deborah Thompson says, “This amendment creates a possible scenario where the right kinds of borrowers can make the most.” She explained that with a reduced AGI and simultaneously a larger family, the income-driven repayment program of many people will ensure a better deal.
For What Reason is it Significant Now
During the pandemic, the relief programs being terminated and the accrual of interest on the debt are the cause of more than 40 million people with loans to pay the increased monthly bills. The Department of Education’s fix of its latest regulation makes their well-being the talk of the day, which is in opposition to most of the feedback received.
This change also occurs at a time when the continued legal uncertainty around the SAVE plan, which aimed to make it easier to repay the loans, but was confronted with litigations.
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What Are the Necessary Steps One Should Take?
If you are married right now or planning to get married, the four steps below will be helpful to you:
- Choosing right tactic for tax filing: If you are on an IDR plan, you may consider going with tax filing separately.
- Just put in your family size details in your loan servicer portal after updating them.
- Recompute your income-driven repayment amount by using Loan Simulator available on StudentAid.gov.
- Keep a close eye on the information from your loan servicer about the updated billing amounts.
The Income-driven Repayment applications are slated to be back on track by May 10, 2025, as per the Education Department.
Final Statement
Marriage has always been a trigger for financial considerations, but now student loan borrowers have another reason to take this matter seriously. A huge number of married borrowers will benefit from their monthly payments getting reduced thanks to the policy amendment.
It is a reminder for the tax filing status and family size by which loan repayment has to be done and which have never been more important.
For full text and the latest changes, please go to the official page of Federal Student Aid site.
