If you have federal student loans, then you may have the option of enrolling an in income-driven repayment plan (IDR plan). The four income-driven plans used by the Department of Education include Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE) and Income-Contingent Repayment (ICR).
IDR plans set monthly payments to a percentage of your discretionary income. However, there is a catch if you are enrolled in one of these plans. You must recertify these plans each year. When you recertify, you are reporting any changes in income or household size over the past year. This allows your servicer to revise your monthly payments. You are still required to recertify even if there were no changes to your income or household size.
If you fail to recertify by the deadline, then your payments could revert back to the amount you owed under the standard 10-year repayment plan. This can be an especially nasty surprise if you have set up automatic student loan payments through your bank. An amount that is much larger than what you were expecting could be pulled from your account.
Your loan servicer should send you a recertification notice several months before the deadline. However, complaints lodged with the Consumer Financial Protection Bureau (CFPB) show that loan servicers do not always meet this obligation. You can always call and confirm the recertification deadline with your loan servicer. Once you have the date, be sure to set a reminder in your phone or mark it in on your calendar. If you are able, it would be wise to recertify weeks or months before the deadline.
How Do I Recertify My IDR Plan?
You will need to visit the Department of Education’s Federal Student Aid website to recertify your IDR plan. Once you are on the website, scroll down to the “Returning IDR Applicants” tab and select “submit annual recertification of my income.” You may need to register a Federal Student Aid ID to recertify using the Education Department’s website.
The process is much easier if you have already filed your income taxes with the IRS. In such cases, the Education Department allows you to recertify with your most recent income tax information through its website. However, it may take the IRS several days or weeks to make this information available if you recently filed your income taxes.
Only recertify over a secure internet connection. You should also make sure the computer you are using has up-to-date malware protection. Your servicer should send you a notice once they have processed your recertification. The notice will contain your new payment amount and the date when your new payments begin.
If you are having problems with higher education debt, the Kansas City student loan attorneys at The Sader Law Firm could help you develop strategies for managing repayments.