Married couples with student loans could face significantly higher monthly payments if they file their taxes jointly under the federal government’s new repayment system.

The issue was highlighted in a CNBC article published Monday, which said the U.S. Department of Education’s new Repayment Assistance Plan, or RAP, could make the "marriage penalty" steeper for borrowers. Experts said combining both spouses’ incomes can increase the monthly student loan bill even when only one spouse has student debt.

RAP is one of the two main repayment options now available to new federal student loan borrowers following changes that took effect July 1. Unlike the fixed Tiered Standard Repayment Plan, RAP ties monthly payments to income and family size.

Joint Filing Could Raise Payments

Under income-driven repayment plans, filing taxes jointly can cause both spouses’ incomes to be counted when calculating the borrower’s monthly payment.

CNBC cited Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program, as saying the biggest decision for married borrowers is whether to file jointly or separately.

One example shows how large the difference can be. A woman with $110,000 in student debt earns $50,000 a year, while her husband earns $70,000 and has no student loans. Filing jointly would result in a monthly payment of $730 under Income-Based Repayment, compared with $146 if she filed separately.

"Marriage can change their monthly payment immediately and dramatically, even if their own income hasn’t changed at all," Douglas Boneparth, a certified financial planner and president of Bone Fide Wealth, told CNBC.

The difference can be smaller when both spouses have student debt because both borrowers share the repayment burden.

New RAP Plan Raises Stakes

The new RAP plan could make the difference even larger. Monthly payments generally range from 1% to 10% of adjusted gross income, with higher income pushing borrowers into higher payment percentages.

For example, a borrower earning less than $30,000 could have a monthly RAP payment of about $50. If that borrower files jointly with a spouse earning $45,000, the payment could rise to roughly $437.50, according to higher-education expert Mark Kantrowitz.

The changes come as millions of federal student loan borrowers transition to a smaller set of repayment options. The July overhaul ended or phased out several older plans, while more than 7 million borrowers were expected to move away from the Saving on a Valuable Education plan.

RAP also carries other rules borrowers need to understand. Missing a payment can result in the loss of certain benefits, including interest waivers and principal-reduction matching, while payments may also fail to count toward Public Service Loan Forgiveness.

For couples, however, filing separately is not automatically the better choice. Married borrowers could lose certain tax deductions and credits, including the ability to deduct up to $2,500 in student loan interest.

The key is to compare the potential savings on student loan payments with the additional tax cost of filing separately.

"Have a tax professional run the numbers to see the tax cost side," Landon Warmund, a certified financial planner and student loan professional, said. "Run the numbers on the student loan side and compare the two to help you make a determination."

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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