GOP Student Loan Forgiveness And Repayment Plan Confirms Intended Relief For Married Borrowers
Millions of married student loan borrowers just got a close to definitive answer they’ve been waiting for weeks. A new House GOP bill draft confirms that, if passed, married borrowers who file separate tax returns will not include their spouse’s income when calculating payments under income-driven repayment plans. This clarification, tucked into page 41 of the 103-page draft legislation, ends a short, but intense period of uncertainty with many borrowers bracing for potentially higher student loan bills. The development is a rare bit of good news for borrowers amid a flurry of changes in the student loan landscape, and it’s drawing national attention for its immediate impact on household finances.
The confirmation is part of a broader Republican proposal to overhaul student loan repayment programs. While the sweeping GOP bill would reshape IDR plans and even scale back some student loan forgiveness provisions, it would cement a key protection by explicitly excluding spousal income for those filing taxes separately. It relieves couples who strategically use the married filing separately status to keep student loan payments manageable. It also validates what borrowers were long told under federal law that if you and your spouse file separate returns, your Adjusted Gross Income for IDR is based solely on your earnings. For those borrowers, the draft bill’s language is a welcome reassurance that their monthly payments won’t suddenly skyrocket due to their spouse’s salary.
Married Borrowers Filing Separately Win Spousal Income Exclusion In IDR Plans
Lawmakers spell out how income will be treated for IDR calculations on page 41 of the House Education and Workforce Committee’s draft bill, known as the Student Success and Taxpayer Savings Plan. The bill’s adjusted gross income definition excludes a spouse’s income for a married borrower filing a separate tax return. “Adjusted gross income, when used with respect to a borrower, means the adjusted gross income (as such term is defined in section 62 of the Internal Revenue Service Code of 1986) of the borrower (and the borrower’s spouse, as applicable) for the most recent taxable year, except that, in the case of a married borrower who files a separate Federal income tax return, the term does not include the adjusted gross income of the borrower’s spouse,” the draft bill states.
In plain English, if a married borrower files taxes separately from their spouse, the loan servicer will only consider the borrower’s income, not the couple’s combined income, when determining the monthly payment under an IDR plan. This technical language confirms what married borrowers had hoped to hear: their partner’s earnings won’t count against them in calculating affordable payments.
For borrowers, this clarification has enormous real-world significance. It preserves a long-standing IDR plan policy many have relied on to keep their payments low. Under current IDR rules (and now backed by the House draft bill), a married borrower’s payment is calculated based on their income if they file separately, whereas filing jointly would base the payment on the combined household income. That difference can be dramatic. For example, consider a scenario where one spouse earns significantly more than the other or one spouse has no student debt – filing taxes jointly would inflate the IDR payment by including both incomes, but filing separately means only the borrower’s income counts. The House GOP bill effectively provides more favorable treatment for these cases. By writing this into law, Congress would ensure that married borrowers won’t be penalized for their spouse’s income when choosing a filing status to keep student debt payments affordable.
Crucially, the bill’s confirmation of this policy ends a growing fear that Congress or the administration might do the opposite. This aspect of the Republican plan is a clear win for borrowers, even as other elements of the bill, such as creating a new Repayment Assistance Plan and ending the current SAVE plan), have sparked controversy. By keeping spousal income off the table for separate filers, the bill aligns with the principle that a borrower’s IDR payment should reflect what they take home, not their spouse’s earnings.
Student Loan Forgiveness And Repayment Update Comes After Education Department’s Policy Reversal
This confirmation in the House bill comes after weeks of uncertainty triggered by the Department of Education’s back-and-forth on the issue. In late March and early April, married borrowers were jolted by confusing signals from the Education Department about whether spousal income might suddenly be counted in IDR payments, even for those filing separately. An initial legal filing by the Department suggested that, due to a court injunction, married borrowers on IDR would soon have to include their spouse’s income regardless of tax filing status. This revelation, which was reported in mid-April in a Forbes post, caused panic among borrowers. Many couples had deliberately filed taxes separately for years to avoid having a higher combined income drive up their monthly student loan payments. Suddenly, it sounded like that strategy could be undermined, potentially forcing higher costs for millions of borrowers.
The confusion stemmed from an ongoing legal battle over the SAVE plan and a resulting court order. In response to a federal appeals court ruling that halted aspects of the SAVE plan, an Education Department official filed a declaration indicating a significant change. In the future, IDR calculations would count spousal income for all married borrowers, even those filing separately. This was a stark departure from the standard practice and what borrowers had been previously told on federal websites. The news spread quickly, and the prospect of IDR payments doubling or tripling for some married borrowers led to a flurry of questions, distress on social media, and even talk of extreme measures.
Facing mounting pressure and confusion, the Department of Education walked back the statement just days later. In a swift reversal that relieved many, the Department issued a corrected court filing clarifying that spousal income will not be factored into IDR payments for borrowers who file separately. This reversal calmed the immediate fears, but the draft bill would codify the approach.
Why This Student Loan Forgiveness And Repayment Update Matters For Married Borrowers
When the Education Department corrected its guidance, it acknowledged that keeping spousal income out of the calculation would prevent payment hikes and might lower payments for specific borrowers. How could payments decrease from what they were before? The key is in the fine print of how IDR formulas work. By clarifying that the spouse is counted in the family size but the spouse’s income is not counted in earnings, the Department essentially ensured that some borrowers get to subtract a larger household deduction (for having an extra family member) from the same single-income earnings. The result is a smaller discretionary income and, thus, a smaller monthly payment required.
The past month’s whirlwind of conflicting information had many such borrowers on edge, fearing they’d suddenly see a spike in payments they hadn’t budgeted for. With the House GOP explicitly backing the exclusion of spousal income and the Education Department implementing the fix, married borrowers can breathe easier. They have explicit confirmation that their IDR payments will continue to be calculated based on their income alone when filing separately, as intended.
Read the full article here
