A move that would've surged married student-loan borrowers' payments was a mistake, Trump's admin says
The previous filing said spousal income would be used to calculate payments, even if borrowers filed separately.
The department said that the change was "erroneous," and the calculations will not change.
Married student-loan borrowers won't have to worry about changes that could increase their monthly payments after all.
After the American Federation of Teachers sued President Donald Trump's administration for taking down online access to income-driven repayment applications, the Department of Education wrote in a legal filing that married student-loan borrowers who file separate tax returns would have their combined income counted to calculate monthly payments.
That would've surged some borrowers' payments because it would mean that monthly payments on an income-driven repayment plan would be based on a higher combined income.
The Department of Education corrected that in a legal filing last week, saying that the change to married borrowers' payment calculations "was erroneous." Instead, Acting Under Secretary James Bergeron said that married borrowers filing separately would have the spouse counted in the family size to calculate monthly payments.
"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 said.
So, for now, the process for monthly payment calculations will stay the same, and married borrowers who file taxes separately do not have to worry about affording payments based on the combined spousal income.
The Education Department said it initially removed online access to income-driven repayment applications as a "required consequence" of a federal court blocking the SAVE plan. SAVE, which was created by former President Joe Biden to give borrowers cheaper monthly payments and a shorter timeline to debt relief, has been blocked since last summer following a lawsuit from GOP-led states.
Borrowers enrolled in SAVE are on administrative forbearance pending a final legal decision, and they can choose to apply for a different repayment plan if they want to continue making payments and earning credit toward the Public Service Loan Forgiveness program.
However, there is not yet a timeline for when servicers will begin to process the backlog of income-driven repayment applications.
"This timeline is due to the servicers' internal procedures," Bergeron wrote. "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 Education."
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