If you’re struggling to pay down your federal student loans, you’re not the only one. Many people find it difficult to manage their debt because their current repayment plan may require them to make payments that are too high compared to their earnings. An income-driven repayment plan, which uses a borrower’s income to determine the monthly payment amount, is a great option for anyone who needs more affordable student loan payments.
If you wish to take advantage of this repayment option, you’ll need to apply for it. While you may not want to deal with the lengthy, complicated application process for an income-driven repayment plan request, filling out the application form could be the key to reducing the financial burden of your student loan payments.
Here’s what you need to know about submitting an income-driven repayment plan request form.
How to submit an income-driven repayment plan request
Before you submit an application, know your options. You can choose from four major income-driven plans:
- Pay As You Earn (PAYE): This plan allows borrowers who took out a federal student loan on or after Oct. 1, 2007, to make monthly payments that are either equal to no more than 10% of their discretionary income, or equal to or less than what they would pay on the 10-year standard repayment plan.
- Revised Pay As You Earn Plan (REPAYE): Similar to PAYE, this program allows borrowers to make monthly payments that are limited to 10% of their discretionary income. Unlike PAYE, eligibility is not restricted based on when they took out their first federal student loan.
- Income-Based Repayment (IBR): This plan lets borrowers with high student loan debt and a low discretionary or annual income to make monthly payments that are equal to 10% to 15% of their discretionary income, depending on the date of the borrower’s loan disbursement.
- Income-Contingent Repayment (ICR): This program allows borrowers to make monthly payments that are based on their family size, income and total debt, and will either equal 20% of their discretionary income or the amount of the payments that would be made if the borrower were on a fixed 12-year repayment plan that has been adjusted according to their income.
Familiarize yourself with all these options before making a decision, paying special attention to eligibility requirements, payment caps, repayment periods and general pros and cons.
Discuss your options with your loan servicer
After reviewing your income-driven repayment plan options, contact your student loan servicer to go over the plans in depth. No matter how confident you feel about one option or another, your servicer should be able to provide additional insight. This can help you make a more informed decision before you complete an income-driven repayment plan request form.
Be prepared to provide the necessary information
To be considered for an income-driven repayment plan, expect to be asked for the following:
1. Personal details, including name, Social Security number, address and phone number(s).
2. Which type of income-driven repayment plan you are requesting.
3. Whether you have multiple loan servicers.
4. Whether your student loans are currently in deferment or forbearance.
5. Number of children in your family, including how many depend on you for more than half of their support.
6. How many other people live with you (besides your spouse and children) and depend on you for more than half of their support.
7. Your income:
- Whether you filed a tax return in the last two years.
- Whether your income has significantly changed since your last return.
- Whether you currently have taxable income.
8. Your spouse’s information (if applicable):
- The same questions as those listed above under your income.
- Spouse’s personal identification information.
- Whether your spouse has federal student loans.
- Whether you filed your last return jointly.
9. Proof of income, for which you can use your adjusted gross income (AGI) from your last return. However, if that AGI does not reflect your current income, you can opt to provide alternative income documentation, such as a pay stub, certified letter/statement from your employer or proof of self-employment income.
Submit the income-driven repayment plan request form
Now that you have all your documentation in order, it’s time to actually submit your income-driven repayment plan request form. Note that consideration for the income-driven repayment plans requires only one application to be submitted per borrower.
The easiest way to submit your income-driven repayment plan request is online. The application process could take about 30 minutes. But, allow yourself as much time as you need to answer everything as thoughtfully and completely as possible.
Here are the steps you’ll need to follow to apply online:
- Go to StudentLoans.gov, an official website of the U.S. Department of Education.
- Log in with your FSA ID. If you do not have an FSA ID, create one. FSA ID stands for Federal Student Aid ID, a number used to verify your identity on StudentLoans.gov, as well as other Department of Education websites.
- Use the IRS Data Retrieval Tool to transfer your Adjusted Gross Income from your most recent tax return. If this does not reflect your current income, you can choose to provide alternate proof (e.g., pay stub, letter from employer, proof of self-employment).
If you’d rather apply by mail, follow these steps:
- Ask your student loan servicer for the income-driven repayment plan form. Here’s a sample, but be sure to use application form provided by your servicer, as it should include the address to which the form should be mailed.
- Fill out the form, attach necessary documentation and mail to the address as instructed.
- If you need help in filling out the form, contact your loan servicer.
Don’t forget to recertify every year
Over the course of a year, things could change that affect your income-driven repayment plan, such as your AGI and/or the size of your family. Both these factors help determine your monthly payment and, therefore, must be reassessed every year.
You must recertify your income-driven repayment every year, a process that is basically a reapplication for your income-driven repayment plan so that your monthly payment can be recalculated. Your loan servicer typically sends you a reminder notice when it’s time to reapply.
Of course, if there’s a major change in your financial situation before the year is up, you may not be able to wait. In that case, contact your loan servicer right away to request a recalculation of your monthly payment.
You can also switch to a different income-driven repayment plan that can keep monthly payments affordable, but can also be more suitable for your income level. For example, the income-sensitive repayment plan ensures that borrowers who have been issued loans under the Federal Family Education Loan (FEEL) program will have monthly payments that are equal to no more than 4% to 25% of their gross monthly income.
The bottom line
A high monthly student loan payment is a common financial struggle for many borrowers. You may qualify for an income-driven repayment plan, but don’t hesitate to investigate all your repayment options if payments are unmanageable and your financial health is at risk. If you wonder whether an income-driven repayment plan is the best option for you, then consider refinancing or student loan consolidation, which may potentially offer the relief you seek. If you decide an income-driven repayment plan may be right for you, following the above steps should make it easy to apply.
Kristina Byas contributed to this report.
The information in this article is accurate as of the date of publishing.
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1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of October 1, 2020.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of September 9, 2020. Information and rates are subject to change without notice.
3 Important Disclosures for SoFi.
4 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of July 31, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 7/31/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
5 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 10/15/2020 student loan refinancing rates range from 1.98% APR to 8.55% Variable APR with AutoPay and 2.99% APR to 8.77% Fixed APR with AutoPay.