A Quick Guide to Recertifying Income-Based Repayments

All federal student loan borrowers have access to income-based repayment plans. These plans can help lower your monthly repayments if you can’t afford the current repayment amount. To stay on the plan, it’s important to renew your plan every year. This is known as recertifying your income-based repayment. 

Why You Need To Recertify Income-Driven Repayments

The federal government offers four types of income-driven repayment (IDR) plans: 

  1. Income-Based Repayment (IBR)
  2. Income-Contingent Repayment (ICR)
  3. Pay As You Earn (PAYE)
  4. Revised Pay As You Earn (REPAYE)

Although each plan works slightly differently, they all calculate your monthly payments based on your income and family size. This ensures that the monthly payments are always affordable.

However, enrollment in any of the plans is valid for one year only. You must submit updated documentation regarding income and family status every year to renew it for that year. This is because your income or family status could change from one year to the next. Recertifying your income-based repayment plan ensures that your monthly payments match your current financial and personal circumstances. 

If your income has increased, so will your monthly repayments. On the other hand, if your income has decreased, your monthly repayments will be reduced too. Your monthly payments will also be reduced if your income has stayed the same but your family size has increased. And if you’ve lost your job, your monthly repayments may be calculated as zero. 

There’s no way for the federal government to know about the change in your financial or personal circumstances without recertification. Resubmitting your income and family size annually is a mandatory requirement to continue staying on the plan. This is even if your information remains the same.   

How To Recertify Your Income-Driven Repayment Plan

Recertifying your income-driven repayment can be done either online or by mail. Both require the same information but the online process is faster and easier. Make sure that you’re filling in the recertification form and not filling in a new enrollment form. They both look similar. 

To recertify online, go to Studentaid.gov and log in using your FSA ID. Follow the instructions, update your income and family details, and upload the necessary documents to support your application.  Use IRS Data Retrieval Tool that’s provided to update and verify your updated income. This tool pulls your tax returns from the IRS website and fills in the recertification form automatically. This ensures that there are no mistakes. 

To recertify by paper, download and print the application form, fill it and mail it to your loan servicer. Remember, every federal student loan has a different loan servicer. Make sure you mail your recertification application to the correct lender so there are no delays. You can also request your loan servicer for a recertification application form. 

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Information You’ll Need To Provide For Recertification 

The information you need to provide for recertification is the same as when you enrolled in the plan. 

  • Proof of current income – For this, you’ll need to submit your most recent income tax return or tax transcript. The IRS Data Retrieval Tool will do this for you if you’re filling out an online form. If you’re filling out a paper form and don’t have your tax return information, you may submit alternate proof of any taxable income. This could include a letter from your employer or recent pay stubs. 
  • Family size – Your family size includes any children you have or are expecting. 
  • Spouse’s information – In this section, you’ll need to enter your marital status and whether your spouse has federal loans. 

After filling in all the necessary details, you’ll need to sign the document, attesting that the information provided is accurate.  

Recertifying your income based repayment online doesn’t take more than a few minutes, but not doing so can have serious consequences. 

What Happens If You Fail To Recertify

Depending on which plan you’re enrolled in, a few things can happen if you miss the recertification deadline. 

  • If you use autopay, it could lead to accidental underpaying if your income has increased. On the other hand, it could lead to overdrafts in your checking account if your income has decreased. This could result in expensive penalties and also damage your credit score. 
  • Another consequence of failure to recertify is that any unpaid interest will get capitalized. That means the unpaid interest gets added to the principal, increasing subsequent interest and payments. 
  • Forgetting to recertify will also reset the clock on student loan forgiveness. This could have a huge impact on your long-term financial goals and plans. 
  • If you fail to recertify your family size, your servicer will consider your family size as one. This could increase your monthly repayment amount substantially if you actually have a larger family. If you’re on IBR or PAYE, you could lose your eligibility to these plans as a family of one. 

You can re-enroll in your plan if you miss the recertification deadline. Alternatively, you can resume making payments based on your income after updating your information with your loan servicer. However, you will still have to pay the fees that have already occurred due to the lapse. 

When Is The Recertification Deadline?

Your annual recertification deadline will come up twelve months from the date you initially enrolled in your IDR plan. Your loan servicer should send you a notification informing you that your recertification date is approaching. It’s a good idea to fill out the recertification form and submit all the documentation early. 

As a best practice, complete the application as soon as you receive the notification from your loan servicer even if it’s months in advance. This way you don’t have to worry about late fees, or credit score damage. or that your IDR enrollment may be terminated. No matter how early you send the application, the changes will only come into effect on the due date. 

Don’t rely completely on your loan servicer to send you the notification. Lots of things can go wrong and you may not receive it on time, causing you to miss the deadline. If this happens, you’ll still have to pay the various penalties as you are ultimately responsible for the recertification. If you’re not sure about the due date, ask your loan servicer and set a reminder of your own to avoid missing the deadline and its consequences. 

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