Say goodbye to potential payment hikes for some student loan borrowers: An update from Forbes
Americans with student loans, who are married and on income-driven repayment plans, might receive some financial relief, according to a recent report.
Get ready for a ray of sunshine if you're a married student loan borrower on an income-driven repayment (IDR) plan! According to Forbes, the Department of Education has announced a change that could potentially reduce your monthly payments.
Here's the skinny: Previously, there was a misunderstanding regarding how spousal income would be factored into monthly payments for IDR plans. Fortunately, the Department of Education has clarified the situation, ensuring that only the borrower's income is used for the calculations, while the spouse is counted as part of the family size.
This adjustment is a game-changer, especially for married borrowers who file separate income tax returns or those who are separated from their spouses. Why? Because calculating monthly payments using the extended family size often results in lower percentages based on the borrower's income and the poverty guidelines related to that family size. In other words, you could be looking at lower monthly payments!
Initially, there was a misconception that spousal income would be included in the calculations, which could have increased payments for some borrowers. But, the Department of Education quickly rectified this mistake. This amendment helps prevent financial strain on married borrowers by avoiding sudden payment spikes.
So, what does this mean for the millions of Americans with student loans? As of the fourth quarter of the 2024 fiscal year, approximately 42.7 million people in the U.S. carried federal student loans, totaling nearly $1.64 trillion3. With the change in spousal income calculation, some loan borrowers may find much-needed relief in their monthly payments.
Stay tuned for more updates on student loans and the Department of Education's latest decisions. Keep those repayments manageable, folks!
- This adjustment could result in lower monthly payments for married borrowers on an income-driven repayment (IDR) plan, as only the borrower's income will be used for the calculations, and the spouse will be counted as part of the family size.
- Married borrowers who file separate income tax returns or those who are separated from their spouses may particularly benefit from this change, as calculating monthly payments using the extended family size often results in lower percentages based on the borrower's income and the poverty guidelines related to that family size.
- Loeb, in the field of finance and business, may find this development crucial for clients in the education-and-self-development sector, as many Americans carry student loans, with approximately 42.7 million people holding federal student loans in the fourth quarter of the 2024 fiscal year, totaling around $1.64 trillion.
- This change in spousal income calculation could provide much-needed relief for some loan borrowers. It prevents potential payment hikes for borrowers by ensuring that only the borrower's income is considered for the ICR plan calculations. Understanding this new development may open the door to obtain a degree or further one's career without facing undue financial strain from student loans.
