The income-driven repayment plan regulations don’t define “significant change in income”. Neither does the IDR application. Instead, the current version of the application asks “has your income significantly decreased since you filed your last tax return?” After that, it provides examples of reasons why your income would decrease:
While those examples are great, they don’t help us understand the adverb “significantly”. Is it significant if your income decreases by $1 thousand? What about $10 thousand? Or $30 thousand?
In my opinion, instead of trying to establish a dollar amount threshold to say this change in income is significant or that change in income is significant, the better test is to ask “how will my payment change if I use a pay stub versus the adjusted gross income on my federal income tax return?”
Normally, your loan servicer uses your adjusted gross income and family size to determine your discretionary income, and, in turn, calculate your monthly payment.
When you use a paystub as income documentation that formula changes. It changes because your loan servicer will use your gross income rather than your AGI. In using your AGI, your discretionary income may end up being higher than what it would be if you had used your tax return. And if your discretionary income is higher, your monthly payment amount will be higher, which is the exact opposite of what you want.
Learn More: Who Do You Contact If You Have Questions About Repayment Plans?