Student Loan Update: Married Borrowers' Payments May Rise Under Trump Plan

Student loan payments could rise for some married borrowers as early as next month, after the Trump administration indicated in a recent court filing that it may revert to earlier rules requiring spousal income to be counted in income-driven repayment (IDR) plans.

Newsweek has reached out to the Department of Education's (ED) press team for comment via email on Saturday.

Why It Matters

Currently, married borrowers who file taxes separately can have their IDR plans based solely on their own income. Those who file jointly have their payments calculated using combined household income, which is often higher.

In a recent court filing, the Trump administration acknowledged that a 2023 IDR rule, which allowed some borrowers to exclude spousal income, has been blocked by a federal appeals court. As a result, the ED is expected to revert to prior standards that include spousal income when calculating monthly payments.

This plan would likely result in higher payments for married individuals currently filing taxes separately.

What To Know

In an April 8 filing in American Federation of Teachers v. U.S. Department of Education, et al., a case challenging the department's suspension of IDR plans, the government argued that "the Department fully intends to continue offering income-driven repayment plans on terms authorized by Congress and permitted by the courts."

The ED noted that certain limitations are expected as a result of a forthcoming injunction from a federal district court, from the direction of the Eighth Circuit Court of Appeals to block the 2023 IDR rule earlier this year. The filing notes that the 2023 IDR rule "amended the definition of 'family size' used for all IDR plans so as to exclude spouses when a borrower is married and files a separate tax return."

The defense writes, that as the rule is effectively blocked, "Education expects that by May 10, 2025, servicers will implement the treatment of spousal information" for various repayment plans, "such that 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."

The change could result in higher IDR payments for thousands of married borrowers who file their taxes separately.

The American Federation of Teachers filed its lawsuit after the ED removed and paused applications for IDR plans, a move the department said was necessary following a ruling by the 8th Circuit Court of Appeals blocking the Saving on a Valuable Education (SAVE) plan.

While the ED has since restored access to applications, it has not resumed processing, which it expects to begin by May 10, according to its court filing.

U.S. Code § 1098e, 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."

It remains unclear how the ED's planned changes will align with this statute without creating potential conflict.

The case against the ED was filed nearly a month ago, on March 18, and Senior Judge Reggie B. Walton of United States District Court for the District of Columbia is presiding over it.

As of June 2024, Americans owed approximately $1.6 trillion in student loan debt, according to the Pew Research Center.

What People Are Saying

A spokesperson for the Education Department told Newsweek last month: "A federal circuit court of appeals issued an injunction preventing the U.S. Department of Education from implementing the Biden Administration's illegal SAVE Plan and parts of other income-driven repayment (IDR) plans. The Department is working to ensure these programs conform with the 8th Circuit's ruling, and anticipates the revised form allowing borrowers to change repayment plans to be available as soon as next week."

Travis Hornsby, founder and CEO of Student Loan Planner, wrote on X, formerly Twitter, on Friday: "What the heck @FAFSA is saying by may 10, 2025 they will start counting spousal income for all IDR plans even when folks file married filing separate. This is in violation of statute. Seems like another lawsuit will be incoming."

American Federation of Teachers President Randi Weingarten said in a March statement: "By effectively freezing the nation's student loan system, the new administration seems intent on making life harder for working people, including for millions of borrowers who have taken on student debt so they can go to college."

She added: "Today, we're suing to restore access to the statutory programs that are an anchor for so many, and that cannot be simply stripped away by executive fiat."

What Happens Next?

The plaintiffs are expected to respond in the case soon. The next court hearing is scheduled for April 17.