Student Loan Recertification — On Hold Until Dec 2023

Breathe easy, most federal student loan borrowers! Here’s why:

• Recertification Deadline: You won’t need to recertify your income and family size until December 2023. But keep in mind if you have Federal Family Education Loans, you might need to dust off your paperwork a bit earlier.

• The Annual Check-in: What’s recertification? Simply put, it’s your annual ‘check-in’ with the Department of Education. You update them on changes to your income and family size. Some people call this “IBR income verification.” This helps your loan servicer recalibrate your new monthly payment. This new payment comes into effect after your current 12-month term ends.

Navigating the Pandemic Pause

During the pandemic, we’ve hit a pause button:

• No Recertification Required: Payments have been put on hold due to the pandemic, so you can push recertification to the back of your mind for now.

• Income Changes: If your adjusted gross income has risen since last year, you might consider recertifying before filing your taxes.

A Pause in Payments: Politics and Provisions

Politics have played a part in the payment pause:

• Extended Pause: President Biden stretched the loan repayment pause to late summer 2023. This breather allowed litigation tied to his student loan cancellation plan to settle down.

• The Debt Ceiling Deal: Just as things seemed to be on track, the national debt ceiling loomed, threatening to derail the economy. Before the Supreme Court could make a call on the legality of the president’s extensive debt relief, a deal was struck.President Biden and House Speaker Kevin McCarthy linked the payment pause to the national debt ceiling. The House of Representatives gave the green light to this deal, pushing up the debt ceiling to dodge an economic disaster.But beware — the deal comes with a condition. The pause on student loan payments wraps up 60 days after June 30 — i.e., the end of August.

Armed with this information, let’s dive deeper into understanding income-driven repayment plan annual deadlines.

What exactly is student loan recertification? Picture it as the U.S. Department of Education’s annual check-up on your income-driven repayment plan. It’s how they decide on your new monthly payment. To keep things running smoothly, complete this recertification before your repayment period wraps up.

Remember, this only applies to federal student loans. If you have private student loans, think of them as a different species. Check with your lender to see what repayment options they offer — they might have their own rules.

Those relief measures from the CARES Act? They’re set to say goodbye sometime in 2023. Here’s what to expect when that happens:

1. Back to Regular Interest Rates: Post-forbearance, the interest rate will return to its pre-COVID level. Brace yourself – your payments will restart.

2. Heads-up on Payments: You’ll get a friendly reminder about your payment at least 21 days before your first monthly due.

3. No Rush to Recertify Income: You won’t have to rush to recertify your income before the end of the COVID-19 forbearance. If your recertification date wraps up before the forbearance ends, your loan servicer will shoot you a new date.

4. Income Recalculation Option: If your income has made a significant leap or drop during the forbearance, you can recalculate it. Once the forbearance period ends, your student loan payments will restart based on this new figure.

Related: When Do Student Loan Payments Resume?

Every loan servicer has a different timeline for recertification. If you’re holding Ed-owned student loans, here are your key dates:

1. Aidvantage: December 2023 is your earliest date.

2. American Education Services (AES): You’ll have to check your date with AES. Why? The federal loans they handle are privately held federal loans. These aren’t part of the payment pause, so you’ll need to stick to your original annual recertification date.

3. FedLoan Servicing: You’re also looking at December 2023 as your earliest date.

4. Great Lakes: Here’s a heads up – Great Lakes is passing the baton to Nelnet by spring 2023 and will no longer be a student loan servicer. This transfer has the U.S. Department of Education’s blessing, and they’ve posted about it on StudentAid.gov/greatlakes. Now, don’t panic – your loan hasn’t been sold. The Department of Education will still own your loan. But from here on, Nelnet will be your new point of contact, managing your loan on behalf of the Department of Education. Rest easy, though. This change won’t mess with the existing terms, conditions, interest rates, or available repayment plans of your federal student loan. Your earliest recertification date with Nelnet will be December 2023.

5. HESC/EdFinancial: December 2023 is your earliest date if the Department of Education holds all your loans. If you have non-Education Department-owned FFELP Loans, you must go by your original annual recertification date.

6. MOHELA: December 2023 is your earliest recertification date.

7. Navient: You’ll need to touch base with Navient to confirm your date. Like AES, the federal loans they manage are privately held FFEL Loans. These aren’t included in the payment pause, so keep to your original annual recertification date.

8. Nelnet: Your earliest date is December 2023 for all Department of Education-held loans. For any non-Education Department-owned FFEL Loans, stick to your current annual recertification date.

Remember, you can now self-report your income when applying for or recertifying an IDR plan, but only if all your loans are Direct Loans. This means you can bypass the hassle of submitting tax documentation.

Keep an eye on the clock, though. This option is due to wrap up on December 30, 2023.

To self-report, just fire up the IDR application as you usually would. When you hit Step 2 (Income Information), choose “I’ll report my own income information.”

Wondering how to complete your recertification? Whether you’re with the PAYE, REPAYE, ICR, or IBR plans, you can sort it out online at StudentAid.gov, the Federal Student Aid website, or by mail. The information you’ll need to provide is essentially the same as when you first applied for an IDR Plan:

• Your Personal Details: Update these details if you’ve moved or changed your phone number or email.

• Your Family Size: This includes anyone you support more than 50% of the time and may differ from the number of dependents on your tax return.

• Your Income Information: Use your income tax return from the last two years to certify your income. Alternatively, if your income has changed significantly, you can use alternative taxable income documentation, such as a recent pay stub or a letter stating your gross income.

• Your Spouse’s Income Information: Include and have your spouse sign the form unless you’re separated or unable to reasonably access your spouse’s income information.

Related: Am I Responsible For My Spouse’s Student Loans?

Recertifying Online:

1. Start Right: Head over to the Federal Student Aid website.

2. Find Your Place: Under “Manage My Loans,” click on “Recertify an Income-Driven Repayment Plan.”

3. Access Granted: Log in using your FSA ID and password (the same one you used for your FAFSA).

4. Home Sweet Home: Enter your household information, including family size, marital status, and basic details about your employer.

5. Show Them the Money: Connect to the IRS Data Retrieval Tool to grab the adjusted gross income from your tax return for income verification. If your income has decreased since the last tax year, submit a recent pay stub or other proof of income.

6. The Better Half: If you’re married, input your spouse’s income.

7. Keeping it Personal: Update your personal information, like your contact details.

8. The Final Step: Review and sign your recertification.

Recertifying by Mail:

1. Get Ready: Download and complete the most recent version of the IDR plan request form.

2. Proof Positive: Attach the required income verification documents.

3. Send It Off: Mail your completed form and documents to the address provided by your loan servicer.

Remember, the mail-in process provides a paper trail for your records, which could be handy, especially if you’re pursuing student loan forgiveness. Stay informed and navigate your recertification like a pro whichever route you choose!

So, let’s say you’ve forgotten to recertify. Don’t fret. You can rejoin your current IDR Plan. But let’s be clear. There may be consequences to deal with.

If you drop the recertification ball, these are some penalties you might face:

1. Payment Hike: If you miss the recertification deadline, your monthly payment amount will momentarily stop being linked to your discretionary income. Instead, your new payment amount will be tied to the 10-Year Standard Repayment Plan. And, let me tell you, this could cause your payment to shoot up.

2. Interest Capitalization: For folks on the Income-Based Repayment, Pay As You Earn, or Revised Pay As You Earn plans, beware. Any unpaid interest gets added to your principal balance if you don’t recertify on time. This process, known as student loan interest capitalization, can inflate your loan balance. But if you’re on the Income-Contingent Repayment plan, you get a pass — they don’t capitalize unpaid interest if borrowers miss the recertification deadline.

3. Downsizing Your Family (On Paper): If you don’t recertify on time, your loan servicer will calculate your new monthly payment as if you’re a one-person show, regardless of how many people are in your family. Related: How Income-Based Repayment is Calculated

4. Loss of PSLF Eligibility: Public service workers, listen up. You can get your Direct Loans forgiven under the Public Service Loan Forgiveness Program after making 120 monthly payments under an income-driven plan. But if you fail to recertify, you stop clocking up credit toward those needed payments, at least for a while.

Related: Pros and Cons of Income-Driven Repayment Plans

Navigating the recertification process to secure the most affordable monthly student loan payment can be challenging. Over the years, I’ve guided a diverse range of borrowers, including those with Parent Plus Loans, to assess their repayment options and align their payments with their financial objectives.

Don’t hesitate to schedule a call with me today. We’ll explore viable options that can empower you to manage your student loan debt effectively. Looking forward to hearing from you soon!

UP NEXT: Income-Based Student Loan Forgiveness