If you have federal student loans, you can enroll in an Income-Driven Repayment (IDR) plan, which may make your monthly payments more affordable. That’s because the amount is calculated based on your income and the size of your family.
Income-Driven Repayment is the umbrella term for several federal repayment programs tied to salary, while Income-Based Repayment refers to one specific plan. (Yes, it’s a bit confusing.)
Once you are enrolled in an IDR, you will need to “recertify” annually, by providing updated information about your salary and family size — essentially reapplying for the plan. 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-driven repayment, how to do it, and more.
What Is Income-Based Repayment?
As noted above, the correct umbrella term is Income-Driven Repayment, which encompasses four different plans. These are available to 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 make the amount you pay on your student loan each month more affordable.
The four income-driven repayment programs offered for federal student loans are:
• Saving on a Valuable Education (SAVE) Plan — formerly the REPAYE Plan
• Pay As You Earn (PAYE) Repayment Plan
• Income-Based Repayment (IBR) Plan
• Income-Contingent Repayment (ICR) Plan
For all of these plans, your payment amount is generally based on a percentage of your discretionary income, which is defined by the U.S. Department of Education (DOE) as “the difference between your annual income and 150% of the poverty guideline for your family size and state of residence.” There is a Loan Simulator tool you can use to see what your payments would be for each of the repayment programs.
IDR 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.
With an IDR plan, your payment will never be more than the 10-year Standard Repayment Plan amount, which is the typical repayment plan for the Federal Direct Loan program and FFELs.
Each income-driven repayment plan has a different loan term. For IDRs, 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.
Recommended: Guide to Student Loan Forgiveness
Which Federal Loans Are Eligible for an Income-Driven Repayment Plan?
IDR 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-Driven 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.
You don’t need to consolidate your student loans to apply for an income-based repayment plan.
Recommended: Refinancing Student Loans Without a Cosigner
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The New SAVE Plan
The DOE recently rolled out a new income-driven repayment plan called SAVE (Saving on a Valuable Education). It replaces the old plan known as REPAYE (Revised Pay As You Earn). Under the SAVE plan, the income exemption increases from 150% to 225% of the poverty line.
You can sign up for SAVE now. Those enrolled in SAVE pay 10% of their discretionary income toward their monthly student loan payments, and their loans will be discharged after 20 years for undergraduate loans, and 25 years for graduate loans. For comparison, on an IDR plan, borrowers pay between 10 and 15% of their discretionary income and loans are forgiven after 20 to 25 years.
As of July 2024, those on the SAVE plan will see their payments cut from 10% to 5% of their discretionary income. Borrowers who have $12,000 or less in federal loans will receive forgiveness after 10 years of on-time payments (even if their payment is $0 each month). Borrowers with more than $12,000 in loans should add a year for every additional $1,000 of debt they owe. So if they have $14,000 in loans, they will receive forgiveness after 12 years of on-time payments under the SAVE plan.
Under SAVE, if you are a single borrower earning $32,800 or less or a family of four earning $67,500 or less (amounts are higher in Alaska and Hawaii), your monthly payments will be $0. According to the DOE, borrowers earning more than this will save at least $1,000 per year compared to the other income-driven repayment plans.
What’s more, under the SAVE plan, interest will not accrue if you make your payment on time each month. For example, if your interest charge is $50 each month, and your payment is $30, you won’t be charged the remaining $20.
While many of the SAVE benefits will not be available until July 2024, you can still enroll now. Like other IDR plans, the SAVE plan will need to be recertified every year.
What Is Student Loan Recertification?
Since your repayment plan is based on your income and the size of your family, you need to reconfirm these details every year.
If you apply for an income-driven repayment plan online, the DOE will ask you for consent to access your tax information. If you give consent, they will automatically recertify your loan every year.
If you choose to apply manually (printing out a PDF and mailing it into your loan servicer), you will need to manually recertify every year with your loan servicer.
If your financial situation changes ahead of recertification — like you lose your job — you can reach out to your loan servicer and ask them to immediately recalculate your payments.
How to Recertify Income-Driven Repayments
You can apply for income-driven repayments and recertify your status by going online to StudentAid.gov. Filing your application online ensures that it is sent to each of your loan servicers if you have more than one. Alternatively, you may send 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.
Next you’ll answer questions about your family, including family size, your marital status, and your spouse’s income, if applicable. You can connect your account directly to your tax return to verify your income information. And if your income has changed since your last tax return, you can upload more recent pay stubs.
To recertify by mail, you can download the Income-Driven Repayment Plan Request form, which you can find in the Federal Student Loan Forms library. Fill out the form 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. Paused payments still count toward IDR forgiveness.
Borrowers are not required to recertify before their payments restart. According to the DOE, the earliest you’ll need to recertify is March 1, 2024. If a borrower’s recertification date falls between when loan repayments start and March 1, 2024, it will be pushed out by one year. So if your recertification date is January 1, 2024, that date will be pushed out to January 1, 2025.
If your income has decreased or your family status has changed in the past three years, you may want to recertify earlier. You can fill out a recertification form at any time if you’re struggling to make your payments because your financial situation has changed.
If you fail to recertify your IBR plan by the annual deadline, your monthly payment will switch to the amount you will 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-Driven 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 borrowers need to take each year to inform the government of changes to 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 with a private lender. Our Student Loan Refinance Calculator can help you run the numbers.
Visit SoFi to explore options for student loan refinancing. SoFi offers a competitive rate, flexible terms, no hidden fees, and no prepayment penalty — and you can view your rate in 2 minutes.
FAQ
Can you recertify student loans early?
Federal student loan borrowers who are on an income-driven repayment plan need to recertify their loans once a year. You can recertify early, and it may 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. If you mail in the request, you’ll need to send a copy to each of your loan servicers.
When should I recertify my student loans?
Your recertification date is the date one year after you started or renewed your IDR plan. Your loan servicers will send you a notice that it’s time to recertify your loan.
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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