Once you are in an Income-Based Repayment (IBR) plan, you will need to recertify your income based repayment annually, by providing updated information about your income and family size. The government uses this information to calculate your payment amount and adjust it if necessary.
You can easily recertify online or by mail. Read on to find out when to recertify your income-based repayment, how to do it, and more.
What Is Income Based Repayment?
Income Based Repayment plans are offered for federal student loan borrowers to help make their payments more manageable. It’s an option to keep in mind when choosing a loan or if your current federal loan payments are high relative to your income. The program is intended to set your student loan payment at an amount that is affordable to you each month.
There are four income-driven repayment programs, including the income-based repayment plan. For all of these plans, your payment amount is generally based on a percentage of your discretionary income, as defined by the U.S. Department of Education. In the case of IBRs, discretionary income is “the difference between your annual income and 150% of the poverty guideline for your family size and state of residence.”
IBR payments are determined as 10% of your discretionary income if you are a “new borrower,” who received their loan on or after July 1, 2014. You must also have no outstanding balance on a Direct Loan or Federal Family Education Loan (FFEL).
If you’re not a new borrower, payments are generally 15% of your discretionary income.
Your payment will never be more than the 10-year Standard Repayment Plan amount, which is the standard repayment plan for the Federal Direct Loan program and FFELs.
Each income-driven repayment plan has a different loan period. For IBRs, it’s 20 years for new borrowers and 25 years for those who aren’t considered new borrowers. Any loan balance that remains unpaid at the end of the repayment period will be forgiven.
In an effort to make monthly bills even more manageable, President Biden’s student loan forgiveness plan proposed changes to some income-driven repayment programs. Payments for undergraduate borrowers would be reduced to 5% of discretionary income, which would be recalculated as 225% of the poverty level. The loan term would be 20 years, or 10 years for original loan balances less than $12,000.
Recommended: Guide to Student Loan Forgiveness
Which Federal Loans Are Eligible for an Income Based Repayment Plan?
IBR plans are available for the following types of federal loans:
• Direct PLUS Loans made to graduate or professional students
• Direct Consolidation Loans that did not repay any PLUS loans made to parents
• Subsidized Federal Stafford Loans
• Unsubsidized Federal Stafford Loans
• FFEL PLUS Loans made to graduate or professional students
• FFEL Consolidation Loans that did not repay any PLUS loans made to parents
• Federal Perkins Loans, if consolidated.
Income Based Repayment plans are not available to FFEL PLUS loans or Direct PLUS loans that are made to parents. They are also not available for Direct Consolidation Loans or FFEL Consolidation Loans that repaid PLUS loans to made parents.
Recommended: Refinancing Student Loans Without a Cosigner
What Is Student Loan Recertification?
You will need to apply for an income-driven repayment plan only once. When you do, you will be required to provide information about your income. You may be asked to provide your adjusted gross income if you’ve filed a tax return in the last two years or your income doesn’t differ that much from the income you reported on your tax return.
If your income is significantly different from the income on your tax return, or you haven’t filed one in the last two years, you may be asked for alternative documentation. The government will require you to recertify your income information and family size at least once each year.
How To Recertify Income Based Repayments
You can take care of your IBR recertification online at StudentAid.gov. Filing your application online ensures that it is sent to each of your loan servicers. Alternatively, you may provide paper applications to each of your loan servicers if you haven’t filed a tax return in the last two years or your income has changed significantly since you filed your last return.
To file online, go to the student aid website above, click on “Manage My Loans,” and then click on “Recertify an Income-Driven Repayment Plan.” You’ll need to log in with your federal student aid ID.
Then enter information about your family, including family size, your marital status, and your spouse’s income, if applicable. You can connect directly to your tax return to verify your income information. And if your income has changed since your last tax return, you can send in more recent pay stubs.
To recertify by mail, you can download the Income-Driven Repayment Plan Request form (PDF), fill it out, and attach the required documents. You’ll send the request to the address provided by your loan servicer.
When To Recertify Income Driven Repayment Plans
The government paused income-driven repayments as part of its COVID-19 relief program. The program included suspended loan payments, 0% interest, and stopped collections on defaulted loans. Payments will remain paused through Dec. 31, 2022. Paused payments will count toward IDR forgiveness.
Borrowers are not required to recertify before their payments restart. The earliest they might be required to do so is November 2022.
In normal times, you are required to recertify your income and family size each year, two months before your current 12-month payment period ends. If your income decreases or your family grows, you may recertify earlier than that to help ensure that your payment stays manageable.
If you fail to recertify your IBR plan by the annual deadline, your monthly payment will switch to the amount you would pay under the Standard Repayment Plan. You’ll be able to make payments based on your income again when you update your income information.
The Takeaway
Income Based Repayment plans are available to most federal student loan borrowers and can be a great way to make sure your student loan repayments work with your budget. Recertification is a critical step each year to alert the government to changes in your situation that might affect your payment size.
Refinancing is another way to manage your student loan debt, especially if you have private student loans that don’t qualify for government assistance programs.
If you’re considering refinancing federal loans, just be sure the amount you save outweighs the benefits of income-driven programs, potential student loan forgiveness, or other federal loan protections, all of which you lose access to when you refinance. Our Student Loan Refinance Calculator can help you run the numbers.
FAQ
Can you recertify student loans early?
Yes, you can recertify early, and it may even be a good idea if your family has grown or your income has decreased.
How do I recertify my student loans?
You can recertify your student loans online at the Federal Student Aid website (studentaid.gov), or by downloading and mailing in the Income-Driven Repayment Plan Request form with any supporting documentation.
When should I recertify my student loans?
You should recertify your student loans two months before your current 12-month payment period ends.
SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
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