By Tomas Kassahun
Blavity.com
The Trump administration is adding clarification to a report that suggested that married student loan borrowers may have to pay higher monthly payments. According to Business Insider, the Department of Education initially stated that there would be changes to how it calculates payments for income-based repayment plans,.
Why were student loan borrowers worried about the new policy for married couples?
The borrowers, per Business Insider, were worried because the new policy suggested that spousal income would be included in their monthly payment calculation if couples file taxes separately and this would mean higher monthly payments. However, Acting Under Secretary Bergeron filed a corrected declaration on Tuesday, stating that spousal income will not be factored into the payment calculation for a married borrowers who apply for ICR, IBR, or PAYE and file separately.
The amended declaration adds that the payments for married borrowers may actually decrease because income-driven monthly payments are not only calculated by income, but also family size. Larger families may get lower payments, per the statement.
What’s happening with the plans for student loan payment calculations?
President Joe Biden initially established the SAVE plan to help borrowers reduce their payments and create a path for loan forgiveness. However, the policy faced legal challenges and caused the loan income-driven repayment system to shut down since February. After the Department of Education pushed for the shut down of the entire IDR system, including the plans for ICR, IBR and PAYE, The American Federation of Teachers filed a lawsuit, arguing that the block would significantly harm borrowers who need income-driven plans for affordable payments.
After the lawsuit, the Department of Education indicated that it would soon resume processing applications for ICR, IBR and PAYE. However, borrowers became concerned when they saw a statement from Bergeron on Friday, Forbes reported.
“Education expects that by May 10, 2025, servicers will implement the treatment of spousal information for ICR, PAYE and IBR such that 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, which is a required consequence of the Eighth Circuit’s opinion directing a broadened preliminary injunction,” Friday’s declaration stated.
The statement appeared to contradict the federal law, which states that the Department of Education “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.”
Bergeron has now confirmed that the education department’s policy aligns with the law.
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