Marriage and Revised Pay As Your Earn (REPAYE)

January 8, 2018
By: Mason Gallik

Revised Pay As Your Earn (REPAYE) has been one of the most popular income-driven repayment plans for student loans over the past few years. There is a problem that can arise if you are enrolled in REPAYE and get married, which can be higher monthly payments if you and your spouse work. REPAYE’s basic premise can be found here, but essentially your payments are 10% of your discretionary income. For a single person making $35,000 per year this is about $141 per month in payments. However, this can change drastically if the borrower gets married because under REPAYE the spouse’s income will be counted in the calculation even if the couple files separately. This can lead to marital fighting if one spouse is unaware that he or she may have to start paying towards the other’s student loan bills.

Let’s say Mike is making $35,000 per year as shown above and is engaged to Aisha who is making $60,000 but has no student loan debt. Their combined income will be $95,000 and their discretionary income will be $70,640. This means that after Mike and Aisha get married, Mike’s new payment will be $589 per month or a $448 increase from when he was single! Mike will now be paying about 20% of his total income in the REPAYE plan and may not be able to contribute as much to bills as Aisha would like. Mike will be paying off his debt quicker, but Aisha may not be happy if he is not pulling his weight financially. It is also possible that your payment could lower if your future spouse does not work and therefore your discretionary income decreases since there will be more people in your household.

To prevent marital problems, it is important for both spouses to lay their cards on the table because REPAYE does not have a cap in the amount that a monthly payment will be. You do not want your potential spouse to feel cheated when you are forced to repay a lot more money towards your student loans after your wedding vows.

Pay As You Earn (PAYE) and Income Based Repayment (IBR) are a little different because there is a cap on monthly payments. You can never pay more than what you would pay under the 10 Year Standard Plan for PAYE and IBR. Additionally, under PAYE and IBR if you and a spouse file separately the spouse’s income will not be included in determining your payment. Income Contingent Repayment (ICR) is like REPAYE where there is no cap in the monthly payment amount.

Make sure to discuss your student loan situation before your wedding day to avoid problems!