Recertify Your Income-Driven Repayment Plan Each Year
Many students have the privilege to have income-driven repayment plans such as IBR and PAYE. As you may know, these programs lower monthly payments from the devastating amounts required under the Standard Repayment Plan to something more feasible, but require an annual recertification.
These plans are far from being a one time solution and unfortunately have to be “recertified” once a year. The recertification process will confirm the continued eligibility and adjustment of your monthly payment will be made based on any changes from your income or family size. Every individual is required to recertify income-based repayment plans whether or not your income or family size changed. If you miss a recertification, your payments will no longer be based on your income. Your plan will automatically change into a Standard Repayment amount or more if you’re on ICR or REPAYE. This is a very important step that Select Student Services specializes in.
Recertification for your IBR
The recertification process is the submission of a new application for your income-driven repayment. This application just so happens to be the same application you filled out originally but you would indicate your’re submitting documentation for payment recalculation. An IBR proof of income normally consists of your federal tax return. If for some reason you did not file a return in over two years or perhaps your return doesn’t reflect your current circumstances, then a pay stub or confirmation that you aren’t receiving income will normally be acceptable. Anyone on an IDR plan(s) with multiple servicers, you would have to recertify with each servicer. Annual recertification is necessary and must be done before the deadline or anytime your income or family size changes. You might find yourself needing to recertify several times a year. Select Student Services has educated and continues to educate all employees to properly and accurately recertify income-based repayment plans to avoid any issues or interruptions.
So you forgot to Recertify. What happens now?
Your existing IDR plan is no longer being based on your current income and more than likely increased to the Standard Repayment amount. Unfortunately, things get a little more complex because there are other reasons why failing to recertify can impact you.
- Having auto-pay enabled when your monthly payment increases can always cause your bank account to overdraft due to the change of payment amount. This means overdraft fees can be charged. This can be inconvenient especially when you weren’t aware of this occurrence.
- The subsidized interest has the possibility of being added to your principal balance. This runs the risk of costing you thousands of dollars over the life span of the loan.
- You might have the chance to obtain a hardship forbearance while in the process of straightening out your recertification. The possibility of interest accruing is there.
- There is a chance that your payoff date would be delayed and can be costing you money. How? Well, if you’re hoping for loan forgiveness whether it’s under one of the other income-driven plans or not, the payments being made during the forbearance period may not count.
How many of us forget to recertify?
The department of education states that 57% of borrowers fail to recertify their income-based repayment plans. This is over HALF the people who have the income-based repayment plans. Lenders always send a reminder but there is always the possibility that the reminder might roam around and get lost in the transition to your address. There is also the possibility that you do get a hold of your reminder but life gets busy at times and procrastination can get in the way. This is unfortunate and can cause you to miss your deadline. Many early birds may submit everything immediately but there is no guarantee that everything will be processed on time. The possibility of the servicers being overwhelmed with work and paperwork getting lost is very high.
What’s the best way to recertify?
With a Select Student Services Membership, you will no longer have to stress about recertification. Once you have provided us with the initial date your loans were consolidated or approved, we will send you a reminder each year when the deadline approaches. We will recertify your income-driven repayment plan annually. Our experts will call you and send an email with clear instructions on how to get the process moving forward so that you do not have to carry the burden of recertifying alone.