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How to Recertify Your Income-Driven Repayment Plan
Income-driven repayment (IDR) plans allow borrowers to base their student loan payments on their income, making payments more manageable. Borrowers paying on an IDR must complete an annual IDR renewal to recertify their income and family size and maintain eligibility for the IDR. This keeps monthly payments accurate. IDR renewal is a quick process. Continue reading to learn how to recertify your income-driven repayment plan!
Also see: Best student loan repayment plans in 2021
What is recertification?
Recertification is an annual requirement for income-driven repayment plans. It is the process of updating or reconfirming your income and family size because this information can change in the course of one year. Since IDR payments are based on this information, it must be kept up-to-date to maintain the lowest possible payment. Your lender or loan servicer will inform you when the deadline is approaching.
Though it’s an annual requirement, borrowers have the option to resubmit their information at any time. If your income or family size changes significantly, you can request that your monthly payments be recalculated by submitting an IDR recertification.
How to recertify
There are two options to recertify: Online or through the mail.
To recertify online, use the IDR application on the Federal Student Aid website. Scroll down to “Returning IDR Applicants” and select “Log in to Start.” You’ll need your Federal Student Aid ID and login information. If you only want to preview the application, select “Start Demo” below the login button. The online application is simple and can be completed in 10 minutes. When you complete it, be sure to select that you are recertifying your income.
To recertify through the mail, download and print the application. Complete the information, then send it to your loan servicer. If you have several loan servicers, be sure to confirm their address to avoid any complications.
Related: Guide to student loan terminology definitions
Information needed to recertify
Before completing the recertification application, gather all the necessary information. You’ll need to provide:
Proof of income: The Department of Education requests that borrowers submit their most recent tax return to certify their income. If you don’t have your tax return, other documentation such as pay stubs or a letter from your employer are acceptable.
Family size: Indicate the number of dependents you have or are expecting to have.
Spouse’s information: Your spouse’s income is necessary if you are using the REPAYE plan or if you file taxes jointly.
Reason for submission: Indicate whether you are recertifying or applying for a new IDR.
Signature: The borrower must sign the application to guarantee that the information is accurate.
Consequences of not recertifying
Failing to recertify your information before the deadline can cause changes to your payments.
If you fail to recertify on the PAYE, ICR, or IBR plan, you will remain in the program, but your payments will return to the amount that they would have been on the standard 10-year plan. The unpaid interest on your loans will capitalize, not to exceed 10% of your loan balance when you entered the program.
If you don’t recertify on the REPAYE plan, you will be removed from the program and placed on an alternative repayment plan. Your monthly payments will be based on the amount necessary to repay your loan in full by whichever comes first: 10 years from the date you began repaying under the alternative plan or the end of your 20- or 25-year REPAYE payment period. When placed on this alternative plan, you can choose to remain on it or switch to a different plan if you’re eligible for it. Your unpaid interest will capitalize with no limit.
If you don’t update your family size, the Department of Education will assume you have a family of one. This could increase your monthly payments.
Also see: How to consolidate and refinance student loans
Recertify annually
Overall, regardless of your IDR, you must recertify your income and family size every year. Doing so will keep monthly payments at the correct percentage of your income. Completing your IDR renewal on time will also allow you to avoid potential consequences such as capitalization of interest. Be sure to keep an eye out for a message from your loan servicer when the time to recertify is approaching!
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