Married borrowers who are in one of the income-based repayment plans (REPAYE, PAYE, IBR, and ICR) for their federal student loans have to include their spouse's income if they:
- filed a federal income tax return in the past 2 years; and
- filed their most recent return jointly.
For example, if you filed your 2019 federal return jointly with your husband, then under all of the income-driven repayment plans (IDR) you have to include your husband's income.
But if you filed your 2018 federal return jointly and your 2019 return separately, then you only have to include your spouse's income if you're in the Revised Pay As You Earn Plan.
Each of the repayment plans have different rules for when your spouse's income is included in your monthly payment.
Here's a breakdown of those various requirements under the different IDR repayment options:
- REPAYE. Your spouse's income is always included in your repayment no matter if you filed your return married filing separately or jointly. Your joint income is always used under the REPAYE plan.
- PAYE and IBR. Your spouse's income is included only if you filed your return jointly. If you filed separately, then you don't have to include your spouse's income. Many borrowers are ineligible for PAYE.
- ICR. Under the ICR plan, your spouse's income is included only if you filed your tax return jointly. IMO, Parent Plus Loan borrowers are the only ones who should choose this plan.
So, in regards to the question of "Does income-based repayment include spouse's income?", the answer is that it depends on which repayment plan you're in.
But what if your spouse had nothing to with your student loan debt?
Or what if you and your spouse keep your income totally separate?
Let me answer those questions right now.
Why your loan servicer demands your spouse sign the IDR form
Even though your spouse is not legally obligated to repay your federal student loan debt, they still have to sign the Income-Driven Repayment Repayment Plan Request Form. That requirement remains until your spouse dies or you separate.
But why is that?
Your spouse is required to sign the IDR form to certify that the family size and income information provided is true.
Under some of the income-based payment plans, the federal government also requires your spouse to submit proof of their income even if you filed separately. Under the rules, your loan servicer is not allowed to use their income to calculate their payment. But your spouse still has to submit it. Exactly why that requirement remains is unclear.
Your spouse's signature on the request form does not obligate them to repay your student loan debt.
Your student loan debt will remain your student loan debt no matter if your spouse signs the form or refuses to do so.
The only way your spouse can become responsible for your loan balance is if they refinance or cosign the debt with a private lender.
Again, the only thing your spouse's signature does is certify that the family size and income information is correct.
But what if your spouse refuses to sign the IDR form?
When that happens, you may be tempted to check the box that says, "Married, but cannot reasonably access my spouse's income information".
Let's talk about that box.
What does, "Married, but cannot reasonably access my spouse's income information" mean?
Unfortunately, there’s no definitive answer to say what “married, but cannot reasonably access spouse’s income information”.
The request form doesn’t help.
The instructions to the form are silent.
An old Department of Education form used to ask "are you able to access information about your spouse's income and able to have your spouse sign this application?" That language was removed from the latest version of the IDR form available on studentaid.gov.
The applicable regulations don't help either.
According to the legislative history to the FFEL and Direct Loan Programs, it appears the “unable to reasonably access” requirement was meant to protect two types of student loan borrowers:
- borrowers who file their tax returns separately but were estranged from their spouse or
- borrowers who are domestic abuse survivors.
Admittedly, that's a little helpful. But it doesn't provide guidance on what to do if your spouse refuses to sign the form.
I simply don't know the answer to that.
I do know, however, that when asked that question, some loan servicer companies have advised borrowers to check the "can't reasonably access" box.
Is that bad advice? Or worse, are they advising you to commit fraud?
Am I committing fraud if I check the "married, but cannot reasonably access my spouse's income information" box?
Let me start with this:
I'm not a criminal lawyer.
If it weren't for SVU: Law and Order, I would next to nothing about criminal law.
Having said that, what I remember from studying to become a lawyer is this:
Fraud typically includes some sort of intent element.
That is to say, you have to intend to commit fraud.
Do you commit fraud if you check the "married, but cannot reasonably access my spouse's income information?"
If your spouse is willing to sign the form and turn over their income information, then, yeah, you likely commit fraud if you check that box.
Conversely, if you filed your last tax return separately and your spouse refuses to (a) give you their income information (pay stub, W-2, etc.) and (b) sign the form, then you likely don't commit fraud by checking that box.
But what if you filed your 2020 tax return jointly but your spouse refuses to sign the form? Do you then commit fraud if you check the box?
Here's what I mean.
Yes, it's clear that in checking that box, you're saying you don't have reasonable access to your spouse's income information even though you filed your tax return jointly.
How can you not have reasonable access to their income information if you filed a joint tax return?
Even if your spouse refuses to give you a copy of the tax return, you can still request the tax transcript from the IRS yourself. Still, your spouse is refusing to sign the form. And the servicer will reject the form if your spouse doesn't sign.
So what do you do?
As I shared above, I've heard plenty of representatives from the various loan servicer advice borrowers to check the box.
When they do, two things happen.
First, as I said above, you'll be treated as single. As such, you'll lose your spouse from your family size.
Second, your gross income, not your AGI, will be used to calculate your discretionary income.
Do you commit fraud if your student loan payment amount is artificially higher than it would be if you were able to use your AGI and include your spouse in your family size?
I just don't know.
The benefit of your spouse signing the repayment form
Married borrowers who both have federal student loans benefit from signing each others forms.
When they do so, they get to:
- include each other in their family size;
- use their AGI to calculate their discretionary income and, in turn, their monthly payment; and
- have a monthly payment based proportionally on each of their separate loan balances and taxable income.
As a result, their payment as a household is usually cheaper than if they refuse to sign each other's forms.
But what if you're the only one with federal student loan debt? What benefit does your spouse get from signing the form?
Well, if you're in the PAYE, IBR, or ICR plans, and you filed your taxes separately, the benefit to your spouse is that your payment will be cheaper than it would be if they didn't sign. That means there would be more money for other household expenses, retirement, vacation, etc.
A change in marital status and recertification can be tricky.
For example, let's say you filed your 2020 return single, you got married January 2021, and you have to recertify March 2021.
If you say you're single, then you (a) avoid your spouse signing the form; and (b) use your return as proof of income.
But if you say you're married, then (a) your spouse has to sign the form; (b) you get to use your 2020 return (unless you've had a significant change in income); and (c) you have to include your spouse's return or pay stub.
Let's try another example.
In 2019, you were separated from your spouse. You submitted the form saying you were married but separated. Now, in 2021, your spouse has moved back in. You filed your 2020 taxes separately. You keep totally separate finances. It's time to recertify again. How do you complete the form?
The safest way to complete the form is to check "Married" and have your spouse sign the form and give you their income documents.
And if they refuse to do either one of those things?
Talk to your loan servicer.