- The Trump administration is changing how monthly student-loan payments are calculated for married people.
- Married borrowers could see higher monthly payments, even if they file taxes separately.
- It’s a result of changes the Trump administration is making due to lawsuits against the SAVE plan.
Married student-loan borrowers could soon be faced with higher monthly payments.
President Donald Trump’s Department of Education restored access to student-loan borrowers’ income-driven repayment plans after the American Federation of Teachers sued the administration for taking down the online applications.
The plans, however, will look different this time around, Acting Under Secretary James Bergeron wrote in a recent legal filing in AFT’s lawsuit. He said that by May 10, “married borrowers filing separate income tax returns or separated from their spouses will have spousal income counted for the purposes of calculating monthly payment amount under IDR plans.”
Bergeron wrote that the change is a “required consequence” of a federal court’s block on former President Joe Biden’s SAVE plan. The plan was intended to give borrowers cheaper monthly payments and a shorter timeline to loan forgiveness.
This means that some student-loan borrowers could see their payments surge if their income-driven repayment plan payments are calculated based on spousal income since the combined income is higher than an individual borrower’s income.
It's unclear how the Trump administration will carry out this change, or if it will face additional legal challenges. Allowing married borrowers to file separately is written into the law; the federal statute on income-based repayment states that "in the case of a married borrower who files a separate Federal income tax return, the Secretary shall calculate the amount of the borrower's income-based repayment under this section solely on the basis of the borrower's student loan debt and adjusted gross income."
While the SAVE plan remains blocked in court pending a final legal decision, student-loan borrowers can enroll in an income-based repayment plan, the pay-as-you-earn (PAYE) plan, and the income-contingent repayment plan. Bergeron wrote that the Department of Education had to temporarily remove online access to those plans to revise the applications to comply with the court's ruling on SAVE. The court did not explicitly direct the department to block access to those plans.
Bergeron said there is not yet a timeline for when servicers will begin processing the backlog of the repayment plan applications. He added that borrowers seeking payment credit toward Public Service Loan Forgiveness can access the "buyback" program, which allows borrowers to buy back months that would complete their total 120 qualifying payments.
The Department of Education did not immediately respond to a request for comment from Business Insider.
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