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Married student-loan borrowers can breathe a sigh of relief as recent legal clarifications from the U.S. Department of Education have reassured them that their monthly payments are not poised for an increase due to changes in how income is calculated. This positive development comes on the heels of a legal battle initiated by the American Federation of Teachers against the Trump administration, which had previously dismantled online access to applications for income-driven repayment plans.

Initially, the Department of Education had suggested that for married borrowers who file their taxes separately, their combined income would be taken into account when calculating monthly payments. This proposed change was alarming for many, as it meant that borrowers could see their payments skyrocketing based on a higher, combined income. However, a recent legal filing corrected this assertion. Acting Undersecretary James Bergeron clarified that the approach to calculating payments for married borrowers filing separately had been incorrectly stated. Instead, he emphasized that only the family size would be adjusted to include the spouse, without factoring in spousal income.

But, to be clear, the inclusion of a spouse for purposes of determining family size does not involve the consideration of spousal income, the filing stated unequivocally. This means that for the time being, married borrowers who choose to file their taxes separately will not need to worry about their payments being based on their spouse's income, thus maintaining stability in their financial obligations.

The Department of Education had previously halted online access to income-driven repayment applications, citing this as a required consequence of a federal court's decision that blocked the Save on A Value of Education (SAVE) plan. The SAVE initiative, introduced by then-President Joe Biden, was designed to help borrowers by reducing their monthly financial burden and streamlining their path to debt relief. However, this plan has faced significant legal challenges and has been stalled since the summer due to a lawsuit from states led by the Republican party.

As it stands currently, borrowers who are enrolled in the SAVE plan are under administrative forbearance while awaiting a definitive legal resolution. They do have the option to apply for alternative repayment plans if they wish to continue making payments and earn credit toward the Public Service Loan Forgiveness program. Unfortunately, there is no clear timeline for when loan servicers will be able to start processing the backlog of income-driven repayment applications.

In his statement, Bergeron noted, This timeline is due to the servicers' internal procedures. Specifically, before servicers can begin to process applications, they must update the processing rules in their systems according to the terms of their contracts with the Department of Education. This means that while borrowers are currently in limbo, the Department is working behind the scenes to ensure that the systems will be ready to accommodate their needs moving forward.