Married Couples May Get a Break With New IBR Student-Loan Rules

On July 1, two important changes in the Income-Based Repayment (IBR) plan went into effect that may allow more doctors to join the student-loan repayment program and lower monthly payments for married couples.

IBR is a payment option for federal student loans that keeps monthly loan payments affordable, with payment caps based on household income and family size. In most cases, loan payments are less than 10% of their adjusted gross income.

Borrowers in the plans are also eligible for forgiveness of any remaining debt after 25 years -- or just 10 years if they work in the public-service sector, including jobs in government and nonprofit 501(c)(3) organizations, under the Public Service Loan Forgiveness plan. (This program covers most federal loans.) The 10-year payment period doesn't have to be consecutive -- so, for example, a borrower can work in public service for five years, go into the private sector for a few years, and return to complete the public service when the time is convenient.

Under the rules that go into effect this month, IBR eligibility will be based on either the balance when the loan first entered repayment or on the current loan amount -- whichever is greater. So borrowers with loan balances that have increased due to accrued interest would be eligible to qualify based on what they actually owe. (This calculator can tell you if you're eligible for IBR under the new rules.)

Until recently, married couples who both had federal student loans generally made higher monthly IBR payments than single borrowers. For married couples who file jointly, lenders now use a formula that factors in the couple's total outstanding federal student loan debt and adjusted gross income to come up with the minimum monthly payment. Previously, the formula didn't combine the couple's total student loan debt, leading to monthly payments that were up to twice the amount two single borrowers would have to pay.

If you're married and your spouse has federal student loans too, contact your lender to ensure your payments reflect this new rule change.

You can learn more about changes to the IBR plan and changes to other federal student loans programs that went into effect on July 1 at the Institute for College Access and Success.