Education Department Clarifies Income-Driven Loan Repayment Policy

The Department of Education recently amended its student loan payment policy, specifically aimed at borrowers using income-driven repayment plans. This modification provides clarity regarding the inclusion of spousal income in repayment calculations and aims to ease concerns among married borrowers.

A previous court declaration, filed in April, indicated that married individuals using income-driven repayment plans might see their loan payments increase if both spouses’ incomes were considered. This has been a cause of anxiety for many borrowers, fearing they could face higher monthly payments. The declaration noted that spousal income would factor into calculations for those who file taxes separately or are separated from their spouses.

However, the Education Department clarified this policy on Wednesday, stating that spousal income will no longer be a determinant in calculating loan payment amounts. According to the updated declaration, ‘married borrowers filing separate income tax returns or separated from their spouses will have the spouse counted in the family size for the purposes of calculating monthly payment amount under IDR plans.’

This change is significant as it not only prevents potential increases in payments but could also lead to reductions in said payments. Under the rules governing income-driven repayment and the new SAVE Plan, family size directly affects payment calculations, meaning that including a spouse could decrease individual payment amounts.

The announcement comes amidst ongoing legal actions regarding access to income-driven repayment plans, following the decision of the Trump Administration to withdraw online access to application systems. A lawsuit was filed earlier this year, citing that it was illegal to eliminate access to these financial provisions, which are essential for many student borrowers.

The Education Department is actively working towards restoring access to the IDR application systems, with indications that normal application processing will resume by May 10, 2025.