The Department of Education offers four income-driven repayment (IDR programs) programs for federal student loan borrowers (IBR, ICR, REPAYE and PAYE). These programs limit your monthly payments to a percentage of your discretionary income.
However, there is a universal rule that applies to these four programs—you must recertify your income each year to stay enrolled. Whatever you do, do not forget to recertify by the deadline! Here is a hypothetical example which demonstrates some of the consequences of forgetting to recertify your student loans.
What Could Happen If You Do Not Recertify
Let’s say for example that you are enrolled in the IBR program, which limits your monthly payments to $117 per month. Your monthly payments under the standard 10-year repayment option would be $480 per month. You are also enrolled in automatic payments through your loan servicer, meaning your checking account is auto-debited each month.
Then, for whatever reason, you forget to recertify by the deadline. Your student loan repayments revert back to $480 per month. This amount is auto-debited from your bank account, pushing it into a negative balance and incurs overdraft fees. Suddenly, you are upside down on other important bills, like rent or car payments.
How to Recertify Your Student Loans
Fortunately, it is relatively simple to recertify your student loans each year. You can begin the process by following these steps:
- Make sure you know your Federal Student Aid (FSA) login. You need your login information for the Department of Education’s Federal Student Aid website. Once you have it, go to the Education Department’s page for income-driven student loans.
- Select the “recertification” option. Scroll down to the bottom of the page for income-driven student loans and select the “submit annual recertification of my income” option. At this point, the site will prompt you for your login information. Provide it and proceed to the next step.
- Submit your information. There are a few ways to provide income documentation to the Education Department. The easiest way is to simply provide your most recent tax return. While logged into the Education Department’s recertification dashboard, you can pull your most recent return directly from the IRS website. For this reason, it is helpful to have a recertification deadline set to occur in the weeks after tax season. The Education Department may accept other forms of documentation if you have not recently filed a tax return. You may call the Education Department for assistance on this process.
Keep in mind that it is possible to recertify any time of the year. If you are laid off or demoted, you can recertify your student loans to reflect a decrease in your income. In fact, this should be one of your first steps if you experience job loss while enrolled in an income-driven program. Note that there are drawbacks to entering forbearance or using an economic hardship deferment. However, recertifying after a job loss could set your payments to $0 per month. You can recertify again once you find another job.
If you are enrolled in the Public Service Loan Forgiveness (PSLF) program, try to send your employment certification form at the same time you recertify your income for your IDR plan. By adhering to this strategy, you are less likely to forget recertifying either your income or employment.
Contact Our Kansas City Student Loan Attorneys
The Kansas City student loan attorneys at The Sader Law Firm have experience helping borrowers who are struggling with higher education debt. You may contact us for a consultation.