U.S. Department of Education Reverses Course on Income-Driven Repayment Calculations for Married Borrowers

Department of Education Clarifies Income-Driven Repayment Policy for Married Borrowers

In April 2025, the U.S. Department of Education announced a significant clarification regarding income-driven repayment (IDR) plans for married student loan borrowers. Initially, the Department indicated that for married borrowers filing taxes separately, both spouses' incomes would be considered in calculating monthly payments under IDR plans. This change raised concerns about potential increases in monthly payments for many borrowers. However, the Department has since clarified that this was an error. Under the corrected policy, only the borrower's income will be considered for those filing separately, while the spouse will be included in the family size count, which could potentially lower monthly payments.

Credit: FOX Business

Background: Legal Challenges and Policy Adjustments

The confusion stemmed from legal challenges to the Biden-era Saving on a Valuable Education (SAVE) plan, which aimed to provide more affordable repayment options for borrowers. A federal court's injunction against the SAVE plan led the Department to temporarily suspend access to IDR applications. In response to lawsuits, including one from the American Federation of Teachers, the Department reopened IDR applications and clarified its stance on income calculations for married borrowers.

Implications for Borrowers

The corrected policy ensures that married borrowers who file taxes separately will not have their spouse's income considered in IDR payment calculations. Including the spouse in the family size count may actually reduce monthly payments, as larger family sizes can lead to lower payment obligations under IDR plans. This clarification aligns with federal statutes and provides relief to borrowers concerned about potential payment increases.

Next Steps and Recommendations

The Department of Education has indicated that loan servicers will resume processing IDR applications by May 10, 2025. Borrowers are advised to monitor communications from their loan servicers and ensure their income and family size information is up to date. Those considering different tax filing statuses should consult with financial advisors to determine the most beneficial approach for their specific circumstances.

Sources:

1. The Washington Post – Education Dept. cuts plan to raise student loan payments for married borrowers https://www.washingtonpost.com/education/2025/04/17/student-loan-married-borrowers-cut/

2. Scripps News – Education Department clarifies upcoming changes to income-driven loan repayment https://www.scrippsnews.com/us-news/education/education-department-clarifies-upcoming-changes-to-income-driven-loan-repayment

3. Forbes – Married Student Loan Borrowers Get Reprieve After Department Of Education Walks Back Statement https://www.forbes.com/sites/adamminsky/2025/04/16/married-student-loan-borrowers-get-reprieve-after-department-of-education-walks-back-statement/

4. Bankrate – Education Department announces May start dates for IDR processing and federal student loan collections  https://www.bankrate.com/loans/student-loans/current-student-loan-news-april-22-2025/