One question I get frequently in my role as a student loan consultant goes something like this: “I have this great low payment, but I’m a little nervous. On my income-driven repayment certification each year, I check a box that says that I’m ‘married, but cannot reasonably access my spouse’s income information.’ Is this something I could get in trouble for?”
The short answer is yes, because in most cases this is fraud or, at a minimum, intentionally inaccurate.
We’ll cover why that is, and why you don’t even need to check this box to reduce your student loan payments in most cases for income-driven repayment.
Saying You Can’t Access Your Spouse’s Income for Student Loans Is Usually Fraud
Why does the government want to access your spouse’s income information as a student loan borrower?
The majority of student loan borrowers now sign up to pay their loans on an income-driven repayment plan.
Long term, a majority of Americans still get married at some point in their lives, particularly those with higher education levels.
When calculating your payment amount for federal income-driven repayment programs, the government includes your spouse’s income too if you file your taxes as “married filing jointly.”
If you and your spouse both have loans, then you can split that payment proportionally based on what percent of the overall debt each of you owe has.
However, if you’re the only one with student debt, getting married can cause your payment to go up even though your spouse had nothing to do with borrowing that money.
Some people believe that this is unfair, and that feeling might cause them to rationalize seeking to avoid giving the government information on their spouse’s income.
Why borrowers check ‘can’t access my spouse’s income’
Imagine you owe $200,000 in student loans, earn $50,000 a year and have a spouse who earns $50,000 a year also.
If you filed jointly, you would have to pay $618 a month. If you checked “can’t access my spouse’s income,” you might be able to pay as little as $201 a month.
That’s almost a $5,000-per-year incentive to fudge the numbers.
What is the ‘can’t access spouse’s income’ box intended for?
If you look at the history and commentary around adding the “married, but cannot reasonably access my spouse’s income information” box to the income-driven repayment certification form, it’s intended to be for:
- Victims of domestic violence
- Spouses in the process of separating
- Spouses living apart
- Situations in which one spouse might be in another country, such as being on a military deployment
If you live in the same household, you can reasonably access your spouse’s income unless you fall into one of the categories listed above.
I’ve heard borrowers try to justify their response with comments like, “well you don’t understand, my husband literally will refuse to give me his income because it is ‘none of my business.’”
There is a much better way to achieve the goal of paying less on your student loans. Choose the Income-Based Repayment (IBR) or Pay As You Earn (PAYE) repayment program and file taxes separately.
How to avoid paying on your spouse’s income under IBR plans
The American student loan system is complicated, but it gives you the ability to exclude your spouse’s income completely legally.
Perhaps it should be easier. I’m not the one who designed the system; I just want to help you successfully navigate it.
If the borrower mentioned above with the $50,000 income filed separately from her spouse earning $50,000 for taxes, then she could legally exclude her spouse’s income from calculating her PAYE payment.
That $201 payment per month would be the result. If she signed up for REPAYE, then she would have to pay the $618 no matter what because REPAYE always counts your spouse’s income.
You can’t trust your loan servicer
I’ve heard many borrowers justify their response to the “can’t access spouse’s income” box because they claimed their servicer told them to say that, which I totally believe!
Call center customer service quality at the loan servicers is atrocious. The phone reps generally have a script that says to recommend the REPAYE program in basically every situation.
Of course, you cannot exclude your spouse’s income from the payment under REPAYE, which means some borrowers would be better off filing taxes separately and selecting PAYE.
However, that’s far too complicated of a concept for a $15-an-hour phone rep to discuss when he’s trying to keep his average call length short. So, a phone rep who doesn’t care or who’s in a rush is likely to tell borrowers to do something that’s not correct to speed up the conversation.
Other rulings with programs such as Public Service Loan Forgiveness have found that loan servicing reps cannot promise anything to you. Many borrowers were told they were building credit in loan forgiveness programs by reps only to find out later that they were given incorrect information.
So, you cannot trust loan servicer reps on this question.
What makes saying you can’t access spousal income fraud?
Generally, if you say you can’t reasonably access your spouse’s income you’re committing fraud because it’s just not completely true. Here’s how the question appears on your IDR form:
When you say yes to this question, you’re technically at risk of committing a violation of this warning at the top of the form:
WARNING: Any person who knowingly makes a false statement or misrepresentation on this form or on any accompanying document is subject to penalties that may include fines, imprisonment, or both, under the U.S. Criminal Code and 20 U.S.C. 1097.
Fines, imprisonment or both. That’s not something to mess around with.
What is the risk the government will catch me or punish me?
In reality, auditing individual borrowers will not become popular until egregious cases of abuse leak out to the media. That will happen eventually, such as when the Government Accountability Office revealed some borrowers were misrepresenting their family size as having 93 people to avoid paying anything on their student loans.
Would the government go after you? Probably not, but they could. That principle leads everyone to try to be honest on their taxes: partly because it’s the right thing to do, and partly because they’re afraid of being caught.
Remember later on the IDR form, the government offers this out to you:
Again, if you answer no, then under PAYE or IBR you don’t need to include your spouse’s income at all in the calculation.
You will still have to provide it, but they won’t use it.
One thing that’s mind blowing: Some borrowers check they can’t access their spouse’s income even while filing a joint tax return.
That’s just pure foolishness because you’re saying on one form you can’t access your spouse’s tax information but on another you’re saying that you promise that all the income information you can see (including your spouse’s) is accurate. Those discrepancies would be the most obvious cases to prosecute if the government chose to do that.
Of course, we could eventually see reform of the system where spousal income becomes irrelevant to your individual student loan payments. It probably should be that way, but policy makers have long included a “marriage tax penalty” that causes taxes to be higher on married couples than for individuals in many cases.
Get a plan so you don’t feel you have to commit fraud
You never need to fudge the numbers to pay as little as legally possible on your student loans. You just need to know and respect the rules.
Sometimes these rules are not very clear, such as in the case of community property states and providing acceptable alternative documentation of your income.
However, other loopholes, like filing taxes separately, are crystal clear.
You don’t need to come close to committing what could be fraud to get a great student loan plan. If you need one, just contact our experts.
What has your experience been saying you can’t access your spouse’s income? Who told you to do it? What is your reasoning? Would you do it if you could just file taxes separately instead? Comment below (and feel free to change your first name when posting).