If you’re struggling with your student loan payments, an income driven repayment plan (IDR) can be a huge help because your payments are capped at a percentage of your income, reducing how much you owe each month.
However, IDR plans are not a set-it-and-forget-it solution. Since your income and family situation can change every year, the government requires you to renew your IDR plan annually. This process starts with the borrower filling out an income driven repayment form.
Below, find out how to recertify your IDR plan application and what you need to know about the income-driven repayment plan renewal process — specifically:
How does the recertification process work?
There are four types of income-driven repayment plans:
- Income-based repayment (IBR)
- Income-contingent repayment (ICR)
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
Regardless of which IDR plan you have, you must provide your loan servicer with your updated income documentation and family status each year for recertification, even if your income and household information are the same.
The IDR recertification form requires you to submit the following information:
- Type of request: Check that you are recertifying your loans rather than filing a new application.
- Family size: If you have children or are expecting a child, add the appropriate number of kids to the form.
- Your spouse’s information: The form will prompt you to enter your marital status and whether your spouse has federal loans.
- Proof of income: The government asks you to submit your most recent tax return to show your updated income. If you don’t have your tax return, you may be able to submit alternative documentation, such as recent pay stubs or a letter from your employer.
- Signature: Your signature is your guarantee that all the information is accurate.
There are two options for recertifying your loans. You can either submit your request electronically via the Federal Student Aid (FSA) website or mail a paper income-driven repayment form to the designated address.
If you plan to submit your information electronically, you will need to create an FSA ID.
Submitting your recertification electronically
If you have access to a computer, the electronic recertification tool is simple and easy to use. You can complete the process in less than 10 minutes.
On the income-driven repayment plan page, scroll down. Under “Returning IDR Applicants,” click “Log In to Start” to the right of “Submit annual re-certification of my income.” Remember, you’ll need an FSA ID password to log in.
If you filed your taxes with the IRS, you could use the tax tool through the FSA to retrieve your most recent financial information, such as your income.
If you’re not yet ready to complete the form but you’re looking for more details, click “Start Demo” beneath the login button.
Submitting your recertification on paper
If you prefer to submit a paper IDR form, you can download and print the application. Or, you can contact your loan servicer and request that it sends you a blank form.
Unlike the electronic version, if you have federal loans from several servicers, you need to submit a separate IDR plan recertification for each lender. Make sure you have a list of all the servicers you need to contact.
Before filling out the form, check that it’s the most updated version. The newest form has an expiration date of Aug. 31, 2021, on the top right corner.
Each loan servicer has a different address, and you can contact your lender to find out where to send the completed form.
Take note of your income changes
When you sign up for an IDR plan, your payments may not stay the same for the duration of your repayment period. If your income decreases or increases, your payments will change, too.
The government only requires you to recertify your income and household size once a year, but you can do it more often if needed. For example, if you’re laid off and you have to accept a lower-paying job, you can recertify your income early and get a reduced monthly payment.
To recertify your income ahead of schedule, you can electronically recalculate your IDR plan monthly payment. Or, you can submit the paper income-based repayment form and check off the appropriate box under Section 2.
Failure to recertify
Ensuring you file your recertification on schedule is essential to maintaining your IDR plan.
If you’re using REPAYE and don’t recertify, you’ll be switched to a different repayment plan where your payment won’t be based on your income. If you’re eligible for another repayment plan, you could switch at this point.
If you’re using IBR, ICR or PAYE and don’t recertify, you’ll keep your repayment plan, but it won’t be based on your income. To again make income-based payments, you’ll need to submit the correct information and be qualified.
This all means that if you have set up automatic payments, your servicer may deduct too much money, resulting in overdrafts and penalties.
Under the IBR, PAYE and REPAYE plans, unpaid interest is capitalized if you don’t recertify, which could cost you hundreds or thousands of dollars more.
If you don’t recertify your family size — under any of the plans — your servicer will assume a family of one. This could increase your monthly payments or cause you to lose eligibility.
Applying ahead of the deadline is your responsibility. Your lender will send you a notification that the deadline is approaching. Setting calendar reminders can keep you on track and help you avoid any issues.
An IDR plan can be a financial lifesaver when you’re trying to keep up with your student loan payments on a limited income. Submitting your income driven repayment plan application is an important task you must do each year to ensure that your payments stay proportional to your income.
Marty Minchin contributed to this report.
