We Both Have Student Loans. Does RAP Make Us Pay Twice?

The Question

My husband and I both have student loans ($48,000 for me and $52,000 for him). I applied to move to RAP last month after I got a SAVE forbearance notice. We file jointly and our combined AGI is around $118,000.

I used a calculator that showed one household payment of roughly $980. But when we each looked at our accounts, we’re each being billed close to $980. That’s almost $2,000 a month and we can’t afford that. Is that right, or did something get processed wrong? We’re considering filing separately next year but I don’t know if that fixes it.

— Danielle

Welcome to the Friday mailbag, where we take one reader question and answer it. Have one? Send it to us — details at the bottom.

The Short Answer

No, you should not be paying twice. Under RAP, a married couple filing jointly gets one payment calculated on combined income, and that payment is reduced when both spouses carry federal loans. Two full payments of $980 means something was processed wrong, and you should be looking at roughly $983 a month between you. The $983 is then supposed to be pro-rated across your loans. Since you have 48% of the balance, your payment is supposed to be $472 per month. Your husband’s payment should be $511 per month. The combined payment is $983 per month.

Here’s the guidelines from StudentAid:

The Full Math Breakdown

At $118,000 in combined AGI, you land in RAP’s top bracket: 10% of adjusted gross income, divided by 12. That’s $11,800 a year, or $983 a month for the household. If you claim dependents, subtract $50 per dependent from that figure. The RAP calculator will confirm it with your exact inputs.

That household payment then gets divided between the two of you according to how much of the combined balance each carries. Your $48,000 is 48% of your $100,000 total, so your share is about $472. Your husband’s $52,000 is 52%, so his is about $511. Add them together and you’re back to $983.

You didn’t say if you had kids, but the $50/mo per dependent comes off the $983, not the individual payments.

The full RAP payment rules walk through the rest of the mechanics, including the interest waiver and the $50 monthly principal match.

Why This Is Confusing

Calculating your IDR payment as a married couple is confusing because most calculators don’t do the pro-rating. You have to use your combined income, and realize the payment is your combined payment.

It’s also important to realize that the only way this pro-rating happens is if both you and your spouse are enrolled in the same student loan repayment plan. We are seeing a lot of instances where one spouse is enrolled in repayment and the other one is still in forbearance, and the pro-rating is not happening.

We are also seeing processing issues. Since most of the payment calculations are handled by business processing organizations (basically outsourced), sometimes the information does not get processed correctly. It’s really important that both you and your spouse are submitting IDR applications to leave the safe harbored forbearance, not just one of you.

Does Filing Taxes Separately Fix It?

It changes the math, but when you do this, you need to focus beyond your student loan payment and see the impact to your taxes. If your incomes are roughly even (call it $59,000 each) filing separately drops each of you into RAP’s 5% bracket. That’s about $246 a month apiece, or $492 for the household, against $983 filing jointly. On paper you save close to $500 a month.

But when you file taxes separately, you nearly always pay more in taxes. Married filing separately costs you the student loan interest deduction outright, narrows or eliminates several credits, and pushes you into less favorable tax brackets. For some couples that’s a few hundred dollars a year and the trade is obvious. For others (particularly with children or education credits in play) it wipes out all of the student loan savings and more. Our breakdown of the married filing separately math shows how to run it both ways before you commit.

They key decision here is whether your tax bill increases by $6,000 per year or not (that’s $500/mo). Your taxes only increase by $4,000, you “win” by filing separate. If they increase by $8,000, you lose by filing separate.

You May Be On The Wrong Plan Anyway

At $118,000 combined, you’re sitting right where RAP stops being the cheaper option. RAP generally wins below roughly $80,000 to $90,000 in income. Above that, IBR’s discretionary-income formula and shorter forgiveness timeline usually pull ahead. Our RAP vs. IBR comparison covers where the crossover actually falls.

Looking at your income (again, not knowing your dependents), I see your payment being $728 combined on IBR, if you’re both borrowers after 2014. I would caution, though, that if you’re “old” borrowers (meaning loans before 2014), then only Old IBR is available and that payment is higher at $1,092 per month combined.

Depending on your goals and history, the length of forgiveness timing also plays a role. IBR is 20 years for new borrowers, versus 30 years on RAP. While it’s moot if you’re going for PSLF, if you don’t see yourselves repaying the loan before that 20 year mark, this is valuable.

What To Do This Week

1. Pull both accounts on StudentAid and validate the billed amount, the repayment plan name, and the date on each loan. You need the paper trail before you call.
2. Confirm which plan each loan is actually on. Coming out of SAVE forbearance, we’ve seen a lot of odd things.
3. Escalate in writing, not by phone. Submit through your servicer’s secure message system so there’s a record, state that both spouses have federal loans and filed jointly, and ask specifically for the spousal loan debt adjustment to be applied.
4. File a complaint with the FSA Ombudsman if the servicer doesn’t correct it within a billing cycle. That escalation gets results more often than a second phone call.
5. Model next year’s tax filing status in the spring when you file your taxes, once your payment is correct and you know what you’re actually comparing.

Where People Get This Wrong

The most common bad advice on this question is that each spouse owes a full payment based on household income, so the only fix is filing separately. That’s wrong, and it can create tax issues for couples.

The second mistake is assuming a servicer’s billed amount is definitionally correct. Through the SAVE wind-down and the RAP transition, borrowers have been finding errors at a rate nobody should be comfortable with. If the number doesn’t match the formula, the number is what’s wrong.

Send Us Your Question

Got a student loan, financial aid, or money question you can’t get a straight answer on? Send it to us and we may answer it in a future Friday mailbag.

Robert Farrington

Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.

Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.

He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.