Key Takeaways
- If you are on an income-driven repayment plan for student loans, your monthly payment is based on your income.
- When you get married and file taxes jointly, your income increases, which can increase your monthly student loan payment as well.
- Filing taxes separately can prevent your monthly payment from rising. However, if you and your spouse both have student loans to repay, you might not need to.
If you have student loans to repay, you can apply for an income-driven repayment (IDR) plan. With this plan, your monthly student loan payments are calculated based on your income and family size. You must recertify your IDR plan each year by updating your income and family information.
However, if you get married while on an IDR plan, your required monthly payment may suddenly increase. Learn why, and what to do about it.
How Getting Married Changes Student Loan Payments
If you are married and file your taxes jointly, your and your spouse’s two incomes combine to make a single income as far as the federal government is concerned. If you’re on an IDR plan to repay your student loans, the income used to calculate your monthly payments suddenly increases. As a result, your monthly payment generally will also increase.
Fast Fact
An income-based repayment (IBR) plan is a type of IDR. With an IBR plan, your monthly payments are equal to 15% of your income (10% if you became a new borrower on or after July 1, 2014) divided by 12.
If you marry and your spouse doesn’t have an income, however, your monthly payment may decrease because your family size has increased but your income hasn’t. You can also prevent your payment from increasing if you and your spouse file taxes separately. When you file taxes separately, only your income will be used to calculate your monthly payment.
Should You File Taxes Separately While Married?
Given the potential for your monthly student loan payment to increase, you might think that filing taxes separately is the obvious best decision. However, there are other factors to consider.
If you are married but file taxes separately, for example, you and your spouse must both either itemize your deductions or take the standard deduction. Depending on your incomes and available deductions, this could mean you end up paying more in taxes than what you’d lose in extra student loan payments.
Another consideration is whether your spouse also has student loan payments. Under most IDR plans, your monthly payments will decrease to account for your spouse’s monthly payment.
Before you decide whether to file your taxes jointly or separately, it is best to get advice from a tax advisor. They should help you pick which tax status makes the most sense for your situation.
The Bottom Line
An income-driven repayment plan for student loans means your monthly payment is calculated based on your income. If you get married and file taxes jointly, your income increases, which can subsequently raise your student loan payments.
Filing taxes separately from your spouse can prevent your monthly payment from increasing. However, there are other factors to take into consideration, such as whether your spouse has student loans and whether it makes sense for both of you to take the standard deduction or itemize deductions on your tax return. To make the best financial decision, talk to a tax advisor about how your tax status will impact your student loan payments.