Married student loan borrowers could face significantly higher monthly payments under a new federal repayment program introduced as part of the Trump administration's student loan overhaul, experts told Newsweek.

The changes center on the newly implemented Repayment Assistance Plan (RAP), an income-driven repayment (IDR) option that experts warn could exacerbate what financial planners refer to as the "marriage penalty." This occurs when a borrower's monthly student loan bill rises because a spouse's income is factored into repayment calculations.

"As many income-driven repayment plans are based on income, filing as married filing jointly can have some dire consequences for your monthly payment," Kevin Thompson, CEO of 9i Capital Group, told Newsweek.

While joint tax filing has offered financial incentives and savings for many couples in the past, Thompson noted that the calculation shifts when only one spouse carries student debt. In those cases, couples may benefit from filing taxes separately to keep loan payments lower.

“We are already seeing the consequences of student loan debt. Many young people are either waiting until much later to get married, having kids later, or just forgoing it altogether,” he said. “You may also see more defaults in the near term as payments become too high for those already living on limited budgets.”

More than 42 million Americans hold federal student loans, collectively owing upwards of $1.6 trillion. With roughly half of those borrowers married, the structural changes to IDR calculations could potentially impact millions of households nationwide.

Newsweek reached out to the Department of Education (ED) for comment via email.

What Is the 'Marriage Penalty'?

In student loan repayment, a marriage penalty occurs when combining spouses' incomes results in higher monthly loan payments than a borrower would face individually.

The issue has existed under prior IDR programs, but experts say that RAP creates a new layer of financial complexity for married couples because of how repayment amounts are calculated.

"The old calculation was based on discretionary income, your adjusted gross income minus an average cost of living, which better represented how much money someone really had to repay loans. The new formula under the OBBBA is based only on adjusted gross income and does not take into consideration average cost of living," Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek. "This is a double whammy for borrowers who are now paying way more for everyday expenses due to post-covid inflation, but do not get to account for any of that necessary spending."

Borrowers who file taxes separately may be able to reduce the impact of a spouse's income on loan calculations, but doing so can also mean giving up certain tax credits and deductions.

"The decision-making process to file separate or joint is tedious," Powers said.

He continued: "Borrowers will want to create returns based on joint filing, with all the associated deductions and credits as well as retirement plan opportunities and then calculate the resulting student loan repayment. Borrowers then need compare that overall figure with the same calculations when filing separate. It is not a quick or easy task, and may require the help, and additional cost, of a seasoned tax preparer."

What Happens Next

As RAP becomes available, experts say borrowers with federal student loans may want to review their repayment options and tax-filing strategies beforehand.

Married borrowers should generally examine both sides of the equation: the potential student loan savings from filing separately as well as any tax advantages that could be lost by doing so.

"The concern is that student loan policy begins influencing major personal decisions it wasn’t previously intended to shape, from whether couples marry to how they file taxes," Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek.

Contact Newsweek editors for this story: Jason Lemon and Anthony Murray.