Student loan borrowers get relief as Education Department reverses policy

Married student loan borrowers can now feel more at ease after the Department of Education reversed its earlier statement about including spousal income in payment calculations, according to Forbes, which has been closely tracking changes to federal student loan policies. Since February, the federal student loan income-driven repayment system has been largely unavailable following a court decision about the SAVE plan, President Biden's newest program designed to reduce monthly payments. The American Federation of Teachers filed a lawsuit in March arguing that shutting down the entire IDR system was unlawful and would harm borrowers who depend on these plans for affordable payments, Forbes reports in its comprehensive coverage of student loan developments.

In response to this legal challenge, the Department of Education has now committed to resuming processing for several income-driven repayment plans by May 10, 2025, with Acting Under Secretary James Bergeron filing a corrected declaration that removes any reference to counting spousal income for married borrowers who file taxes separately, as Forbes analysis shows this would have contradicted existing federal statutes.

Good news has arrived for student loan borrowers as the income-driven repayment plan application is once again available after being paused in February, according to12 On Your Side, which interviewed lending expert Kate Wood about these important changes. Only three of the four IDR options are currently available—the income base (IBR), income contingent (ICR), and pay-as-you-earn plan (PAYE) while the SAVE plan remains paused due to ongoing litigation, as 12 On Your Side explains in its consumer-focused reporting.

When applying for an Income-Driven Plan, borrowers will now face additional steps, including the need to manually determine which plan offers the lowest monthly payment rather than simply selecting an automatic option, Wood told 12 On Your Side in an interview. Although applications have reopened, processing has not yet begun as loan servicers implement necessary changes to their systems, and experts recommend contacting loan servicers about forbearance options if payments cannot be made during this waiting period, with 12 On Your Side noting that the Department of Education has extended the deadline for income recertification to February 2026.