Student loan recertification is the process borrowers undergo to remain in an income-driven repayment plan. Each year, you'll need to reconfirm your family size and income so your loan servicer can calculate a new monthly payment. Your new payment won't start until your current 12-month repayment term ends. Here's what to know about IDR annual recertification.
What is student loan recertification?
Student loan recertification is the Department of Education's process to determine the new monthly payment for borrowers in an income-driven repayment plan. To avoid consequences, borrowers must complete the annual recertification before the end of their current repayment period.
End of COVID-19 Forbearance: IDR Recertification
The CARES Act-related forbearances are set to expire on September 30, 2021. After that, according to the U.S. Department of Education, student loan borrowers will:
- get notice of their payment at least 21 days before their first monthly payment is due.
- not need to recertify their income before the end of the COVID-19 forbearance. If your recertification date ends before the forbearance ends, your loan servicer will send you a new recertification date.
- allow borrowers to recalculate their income during the forbearance if their income has changed significantly. When the forbearance ends, your student loan payments will restart at the new amount.
Great Lakes: if Great Lakes is your loan servicer, your IDR recertification is due no sooner than October 31, 2021.
How do you recertify income-based repayment?
You can complete the recertification process for the IBR, ICR, PAYE, and REPAYE Plans online at the Federal Student Aid website, studentaid.gov. You'll need an FSA ID to log in. You can also submit a paper Income-Driven Plan Request form to your loan servicer.
Recertifying online can be faster and easier. Studentaid.gov allows you to access your most recent tax return using the IRS Data Retrieval Tool. The site also lets you submit your annual recertification to each of your federal student loan servicers.
When you recertify, you'll provide the same information you did when you first applied for an IDR Plan:
- Your personal information. Update your address, phone number, and email if necessary.
- Your family size. Family size can be different than the number of dependents you claim on your tax return. It includes people you support more than 50% of the time.
- Your income information. If you filed an income tax return in the past two years, you can use your tax return to certify your income. But if you haven't filed a return in that time, or if your income has significantly changed since you filed, you can use alternative documentation of income (a recent pay stub or letter stating gross income).
- Your spouse's income information. Married borrowers are required to include their spouse's income and have their spouse sign the form — even if their spouse's income won't be used to calculate their monthly payment. The two exceptions are (1) if you're married but separated from your spouse, or (2) you can't reasonably access your spouse's income information.
What is your recertification deadline?
Your annual recertification deadline is ordinarily 12 months from the date you entered into an IDR Plan. However, due to the CARES Act forbearance, your recertification may have changed. The current guidance from the Department of Education is to allow borrowers to skip the recertification process until the forbearance ends. Once that happens, borrowers can contact their loan servicer to find out the new date.
What happens if your income decreases
If your income decreases, you can request lower monthly payments by recertifying early.
When you recertify early, you'll use a pay stub or other proof of your current income. You can skip this step if you're unemployed and have no income.
What happens if you forget to recertify
If you forget to recertify, you can enroll again in your current IDR Plan. But you may suffer penalties.
The penalties for failing to recertify include:
- Payment increase. Missing the recertification deadline stops your payments temporarily from being based on your discretionary income. Instead, your new payment will be based on the 10-Year Standard Repayment Plan, causing your payment to increase significantly.
- Interest capitalization. The Income-Based Repayment, Pay As You Earn, and Revised Pay As You Earn plans add the unpaid interest to your loan balance if you don't recertify on time. The processing of adding the interest to your loan balance is called capitalization. The income-contingent repayment plan does not capitalize unpaid interest if borrowers miss the recertification deadline.
- Family size decrease. By failing to time recertify, your loan servicer will calculate your new monthly payment amount based on a family size of 1, no matter your actual family size.
- Lose eligibility for PSLF. Public service workers can get their Direct Loans forgiven under the Public Service Loan Forgiveness Program after making 120 monthly payments under an IDR Plan. Failing to recertify temporarily stops you from earning credit towards those required payments.
Need help with your annual recertification? Let's talk
Timing the recertification process to get the lowest monthly student loan payment can be tricky. Over the years, I've helped borrowers, including Parent Plus Loan borrowers, like you evaluate their repayment options to get a payment amount that first their financial goals.
Schedule a free 10-minute call with me today. We'll go over options to help you take control of your student loan debt.