Written By Meagan McGuire, ChFC®, CSLP®
Editor's note: On Friday, March 1, 2024, the Department of Education decided to abruptly delay recertification of Income Driven Repayment (IDR) for borrowers until “no earlier than late September 2024.” Learn more.
Recertification time for federal student loan borrowers on an income-driven repayment (IDR) plan can stir up some anxiety. Many borrowers don't know how to recertify an income-driven repayment plan. So, it's common to worry about whether your payment will increase or to not understand what your payment is even based off of. Additionally, major milestones, like getting married or having children, can significantly impact your payment.
This guide will break down frequently asked questions and help you feel more confident when you complete this reporting requirement.
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How to recertify income-driven repayment: Tips for filling out your IDR Plan Request Form
First things first, let’s cover some basics, which may cover a lot of questions for single borrowers:
1. When to recertify for income-driven repayment
You can submit an income-driven repayment (IDR) plan request form at any time. However, you’re only required to submit updated information once per year on your IDR anniversary date. If your income has dropped, for example, this would be a great time to consider completing a new application. This will immediately recalculate your monthly payment amount because your payment is no longer reflective of your current income.
Take note of the different application purposes and apply accordingly:
- New Applicants: You're not currently on an income-driven plan and want to apply.
- Returning IDR Applicants: You want to submit annual recertification of your income.
- Recalculate my monthly payment: Your income or family size has changed. You can request to recalculate your IDR payment at any time to reduce your current monthly payment.
- Switch my current plan to a new plan: You're currently enrolled in an IDR plan but would like to switch to a different one.
2. How your adjusted gross income factors into your IDR plan
The IDR Plan Request form will always link back (or try to link back) to your most recent federal income tax return to collect your adjusted gross income. If the IRS data retrieval tool does not successfully link to your last tax return, it could be because:
- Your name and/or address was not exactly how it appeared on your last tax return (e.g., putting “Sam” for your first name if your return said “Samantha”).
- The IRS website might be offline or experiencing some other technical issues.
- If you filed your taxes electronically within the last three weeks or via postal mail within the last 11 weeks, your tax information might not be available yet.
- Your federal tax return indicated an outstanding balance owed, which may result in a delay in processing.
You're required to submit alternative documentation of your income (e.g. a paystub), if your tax return doesn't link through. The same applies if you answer “Yes” to the question about whether your income has significantly decreased (e.g. you lost your job or experienced a drop in income) since you filed your last income tax return.
The IDR Plan Request application will ask you to “Estimate Your Payments” by requiring you to enter your AGI. This is somewhat arbitrary in the sense that they don't use this information to calculate your payment. Instead, they use the IRS data retrieval tool information or the alternative documentation you submit.
The projected cost and payment over time is based off of a 5% growth rate in your income year over year. So, it’s not necessarily reflective of what you can totally expect. Schedule a consultation here to get your customized student loan plan.
3. How to reduce your AGI
Because your payment is based off of AGI, you can lower AGI by saving in your pretax accounts. This includes a 401(k) or 403(b) retirement account, individual retirement account or health savings account. The maximum allowed in your employer retirement plan is $19,500 for the year 2021. Contributing to pretax accounts reduces your AGI, which reduces your student loan payments while building your long-term wealth.
FAQs about how to recertify an income-driven repayment plan
How does “family size” factor into my payment calculation?
Family size matters for your IDR plan because it’s part of your federal student loan repayment calculation. Your payment is based on discretionary income, which factors in the poverty line for your household size. You count as one household member. If you have a spouse, you have a household size of two. The application will automatically count you (and your spouse, if applicable).
The application will ask how many dependent children you have. However, this is different from a dependent child for tax purposes. This question is pretty black and white. “How many children, including unborn children, are in your family and receive more than half of their support from you?”
Then, it'll ask you about other dependents. “How many other people, excluding your spouse and children, live with you, and receive more than half of their support from you?” Remember, this question may not reflect who you claim from a tax perspective, and that’s okay.
What if I lie on the application about my family size or dependents to reduce my payment?
Don’t lie. Any person who knowingly makes a false statement or misrepresentation on this form can be subject to penalties. This may include fines, imprisonment or both.
What changes if I got married this year but we haven’t filed taxes together yet?
Under marital status, you'll need to disclose that you’re married (unless you’re not legally). If you indicate you're married, you'll get the poverty line deduction for a two-person household size.
The next question will be: “If placed on the ICR plan, do you want to repay your Direct Loans jointly with your spouse?” If you want your spouse’s income to be included in your payment calculation, say yes to this income-contingent repayment question. If not, say no. Note: The Revised Pay As You Earn (REPAYE) plan counts joint income regardless.
It will then use the IRS data retrieval tool to link back to your most recently filed tax return, which should be for a single filer.
The next questions will trigger whether or not to ask for your new spouse’s income information to be included in your payment calculation. If you didn't have access to your spouse’s last tax return since you weren’t married yet, select “no”. The application will continue to be based off of just your own income (your last tax return as a single filer) for the next recertification period.
You may get a response on the application like this if you said you did have access to your spouse’s information:
“Based on your response to this question, your spouse will be required to co-sign your application and provide documentation of his or her income. This income documentation will only be used by your loan servicer while you are being considered for or are repaying your loans under the REPAYE plan.”
This response is normal. Your spouse will have to sign off on the application by creating an FSA ID and password, if they don’t have one already. They might also need to provide income information if required by your plan (e.g. REPAYE).
What if both my spouse and I have federal student loan debt?
If you both have federal student loan debt, your payment will affect each other still. Filing taxes jointly will look at your debt load as household debt and a household monthly payment calculation. It will proportionally split that household payment between you two. Therefore, the spouse with more debt will have the larger payment.
If you both have federal student loan debt and file taxes separately, it will continue to keep your payments off of your own income and not look at your debt as a household.
What if my last filed tax return was filed jointly with my spouse?
Your payment will be based off of that joint AGI even if you want to exclude your spouse's income. This is the case unless you're separated from your spouse and unable to access their income information.
You can submit alternative documentation if your income has decreased since the last tax return by answering the question, “Has your income significantly decreased since you filed your last federal income tax return? For example, have you lost your job or experienced a drop in income?” It will still require alternative documentation from your spouse, however.
If you don’t want your spouse's income factored into your payment, you will have to file taxes separately on your next tax filing.
How long does a payment based off of this recertification stay the same?
Your payment based off of your recertification stays the same for 12 months. You'll be notified by your servicer to submit recertification again a month or two out from your annual deadline. Completing the annual recertification early does not change your payment early, and your new payment won't apply until your previous payment schedule ends.
What happens if I don’t recertify?
If you don’t recertify, your payment will switch to the 10-Year Standard Repayment Plan causing your payment to more than likely go up. Your unpaid interest may be capitalized, meaning it will be added to the principal balance of your loans. If you try to re-enter your IDR plan and are no longer eligible — you no longer have a partial financial hardship — you'll have to stay on the 10-year repayment period plan, switch to one of the longer-term Standard or Graduated plans, or switch to REPAYE.
Knowing how to recertify your income-driven repayment plan puts you in the driver seat
Recertification certainly adds to the high-maintenance component of federal student loans. But you can stay on top of your IDR plan by feeling more confident in the questions being asked and knowing what responses trigger follow-up questions.
If you’re unsure of the best student loan repayment strategy for you and your family or need help figuring out how to recertify your income-driven repayment plan, the team at Student Loan Planner® would love to help you. We’ll review your whole student loan situation to help create the best plan for paying your student loans off or having your debt forgiven.
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Take our 11 question quiz to get a personalized recommendation for 2024 on whether you should pursue PSLF, Biden’s New IDR plan, or refinancing (including the one lender we think could give you the best rate).
I have 2 children (family size of 4). If both my spouse and I have federal student loan debt and file taxes MFJ, what would each of us put for number of children on our annual recertification? Both of us technically cannot pay for more than 1/2 of each of our children’s support.
On your recert form you’d list all your children on each of your forms. You’re being truthful in that regard bc this is not asking the number of children you claim on your taxes, it asks how many kids do you have.
How do I deal with Fedloan’s total incompetance? Each year, my husband and I, both on REPAYE, filing taxes jointly, have to recertify two month’s apart. He then gets his adjusted monthly bill for his loan, which looks reasonable. Then I recertify, using the same tax return from the same year, and they suddenly assume I can pay double (as if I had my husband’s income, but he was not in the REPAYE program too). Don’t they calculate hundreds of “married borrowers on
REPAY” recerts each day? Are they all wrong? Last year they responded to my letter and fixed it, but this year they aren’t responding to my email asking for recalculation, and I can’t get through to them on the phone. I know, Covid-19 and all, but I want this recertification done before we have to file taxes by July 15th. Advice? Thanks!
I could be misunderstanding you, but the REPAYE Plan bases your student loan payment on the combined income of you and your spouse regardless of whether you file jointly or separately.
Hi Amy,
I know, but they also have to consider the spouse’s student loan debt, and we both have loans under the REPAYE plan.
I said “household” income, meaning either the AGI on the married return, or adding two separate returns together, either way, it’s the total income of both that counts. Under REPAYE, we each pay Fedloan monthly on our loans, but the total of those monthly payments comes out to 10% of our total HOUSEHOLD income, no matter how we file. When/if my spouse qualifies for PSLF, and his loan payments go away (not to jinx it!!!), as a couple we won’t be saving any money in terms of monthly bills–my monthly bill will just go up so that it represents 10% of our household income (unless I decide to move to a different payment plan and file separately).
To explain, here’s an example, using random round numbers and simplifying a bit:
If 10% of our household income was $12,000/yr, or $1000/month, and my spouse’s loans were 60% of our total federal student loan debt under REPAY, and mine were 40%, each month he’d get a bill for $600, and I’d get a bill for $400. Instead, what Fedloan is doing most years for our separate recertifications (until I call them on it and they fix it) is asking one or both of us to pay the full 10%, or $1000 per month. Some years they screw it up for both of us, doubling both of our payments; this year my husband’s was calculated correctly ($600, using example above), while I was billed for $1000.
Both in an email response from FedLoan and on the studentaid.gov, it says that borrowers do not have to recertify for IDR plans during the forbearance. However, I just got a reminder to recertify by 7/28/2020 and cannot get through to FedLoan to confirm if I need to or not. I obviously don’t want any interest to capitalize. Any thoughts or ideas?
My wife and I were clients of Travis/SLP back in 2017 and are currently plodding along on our IBR plan. A question for you: I have loans serviced through 2 providers. Navient services my undergrad loans and FedLoan services my law school loans. The issue is that my recertification dates are not the same. Unlike in past years, when I submitted my recertification, this year FedLoan denied my request because the recertification was submitted too early.
“You indicated on your request that you are submitting documentation for the annual recalculation of your payment but it is not yet time to recalculate your payment. We will notify you when it is time to submit your annual recertification documentation.”
Navient has already approved my recertification (they also approved my wife’s recertification FWIW). If I submit a 2nd recertification through studentloan.gov for FedLoan, will this screw up my Navient IBR? I’ve not had the issue of being denied for recertifying too early in the past and I believe I submitted around this same time last year (late July/early Aug.).
Background: I’m on REPAYE because my undergrad loans are FFEL from 2008 and my wife is on PAYE for vet school loans. There’s less than $750 due on the FFEL loans so I could just pay them off, but the APR is low (usually sub 2%), and the payment has been $0 for the past 2 years. Maybe I just pay them off to avoid the hassle and get on PAYE…it would avoid this issue in the future (assuming I still have 2 servicers after the shakeup).
Any insight you have would be appreciated.
I ran your question through our consultant Meagan Landress, CSLP, and here’s her response: I think this problem may be due to this being an odd year – recertifications during the CARES Act (3/13-12/31/2020) have been postponed until further notice. If Navient has the FFEL loans and they’re not federally held (where payments are still due) then his successful recertification with them is good. Fedloans new recertification date is TBD and it’s also unknown if they’d combine the recertification dates together later on.
Hope that helps!
I am set to graduate from dental school Spring 2021. I am single. I will not have any income for the 2020 year. If I file a 2020 tax return and file that I made $0… and then when I apply for the PAYE or REPAYE plan in Fall 2021, will the servicer use my 2020 tax return showing $0 for my AGI? If so, will my payment for the first year on the PAYE or REPAYE be $0 for the first year of repayment?
Your income-driven payment can use your previous year’s tax return to calculate payments. Recent graduates often have very low monthly payments (sometimes even $0/month). So it’s possible!
Hello,
I have a question on dependents. We currently have 2. The oldest will graduate in December 2020 and turns 18 in January 2021. My recert is in December. Do I list 2 or 1 dependents?
Two. When you recert, it’ll be before the 18th birthday, so still a dependent.
Thanks for your reply!
Hello,
Quick technical question:
If the timing of your annual income recertification is such that payments for July 2020-June 2021 are based off of income from 2018, payments for July 2021-June 2022 are based off of income from 2019 (etc), when will marriage begin to affect your monthly payments? For example, if you are married in July 2022, when recertification time rolls around for July 2023-June 2024 payments (likely in March 2023), you will indicate you are married on the form, but the taxes you transmit will only show one income since they are from 2021. The same will be true the following year. For both of these years, will your payment only be based off of your income since that is the only income showing on your tax returns (as long as you mark that you don’t have access to your partner’s tax returns for both years)? Or would this only work for the first year?
Thank you!
You can check the box that says you’re married but because you weren’t married during the tax year that the payments are being based on, you can select the option that you didn’t have access to your partner’s tax returns.
I am on the PSLF track and my income no longer qualifies me for IDR (I was denied as of 2019). I did not change my plan, as I am fine with the default payment amount and I don’t want get off track for PSLF. Now that I no longer qualify for IDR, do I still need to submit annual recertification…since my payment can’t increase at this point? Thanks in advance!