IDR Recertification: How & When to Disclose Your Income

Recertifying your income-driven repayment (IDR) plan for Pay As You Earn (PAYE), Saving on a Valuable Education (SAVE), formerly REPAYE, Income-Based Repayment (IBR), or Income-Contingent Repayment (ICR) can open up opportunities to pay less if you're pursuing PSLF or IDR student loan forgiveness.

But after more than three years of not having to worry about recertification, that all changed when payments resumed in October 2023.

The key thing to know is when to turn in your income recertification. If you turn in a higher income too early, you could unnecessarily pay thousands in extra payments. If you fail to inform your servicer about a drop in income, you could also cost yourself thousands.

Adding to this complexity is that some portions of Biden's new IDR plan called SAVE took effect July 30, 2023. So, some borrowers will want to recertify early due to these changes, and others will want to do nothing.

We'll share some great tips on paying less on your IDR payments by making this income-driven recertification decision correctly. 

When is IDR recertification due?

Your annual recertification is typically within a year of choosing an IDR plan as one of your repayment options. The payment pause during the pandemic put this on hold. The Department of Education pushed back most borrowers' new recertification date until “no earlier than late September 2024.”

We can continue to look for guidance and updates from the U.S. Department of Education. Having extra time is huge news and means you might be waiting a while before your servicer asks you for your income information and family size. All of this is thanks to the CARES Act and emergency relief programs.

You can find your recertification due date if you download your NSLDS data file from the Student Aid website.If your recertification date falls before September 2024, then the government will extend it a year.

For example, if your recertification date is June 2024, then the date you would need to update your income would be June 2025.

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How to know if you should recalculate your IDR payment

With the filing separately rules taking effect early under Saving on a Valuable Education (SAVE), formerly REPAYE, if you filed taxes separately in 2022 and are currently using SAVE as your repayment plan, you might want to recertify your income early.

You'd also want to recertify early in general if your income has fallen compared to the last time you provided your tax return.

To apply for early IDR recertification, simply visit the StudentAid site and click on the appropriate button for “Recalculate my monthly payment”

For many borrowers reading this, that tip will be the single most important piece of student loan advice you read anywhere for the next year.

If your current income is lower than before, you can expect a lower payment as well.

Remember that you are not required to let the Department of Education know if your income has risen. That's all handled by submitting your tax return each year.

How IDR recertification can save you money

First, figure out your next IDR recertification date for your federal loans. You can do this by contacting your federal student loan servicer and asking, downloading your NSLDS file and looking at it, or by hiring Student Loan Planner® to make a plan for your student loans.

When your payments resume after the payment and interest pause, your IDR payment will be based on what you paid before the pandemic.

That payment will last until your IDR recertification due date, which will be September 2024 or later.

If you could get a lower payment by recertifying early, then you should do so. You might be able to figure this out through our online calculators. 

How to get lower IDR payments if you have increasing income

Pretend you were a resident physician during part of the emergency deferment and forbearance period during the pandemic. Your income that year reflected half a year as a resident and half a year as an attending physician. 

Your income on your tax return would, therefore, produce a much lower IDR payment than your salary at the end of the year would have. Therefore, you use tax returns to recertify IDR payments annually.

Now imagine your IDR recertification date is typically around this time. Instead of recertifying then, you must recertify in September 2024 or later. 

You can use your low 2019 taxable income now for more than a year to pay less and possibly get more forgiven with the Public Service Loan Forgiveness program, a perk of being on this repayment plan. 

So, if your income has been increasing, wait to give your servicer your IDR recertification until they ask for it. There's no requirement to give it to them sooner. This is one way to manage student loan debt under IDR and enjoy lower payments while it lasts.

How to get lower IDR payments if you have decreasing income

If your income dropped, you simply need to visit the Student Aid site I linked to above and click “recalculate your monthly IDR payment.”

You can do so now or when payments resume. It’s probably better to recalculate the payment now so that the new payment begins at the correct level.  

Many borrowers will fail to do this, and it will collectively cost them millions of dollars. 

If in doubt about IDR recertification, wait until asked

If you’re unsure when to recertify your IDR, just wait until you’re asked to do so. 

Borrowers whose incomes went up during the pause would cost themselves money by certifying sooner than they’re required to. 

Only borrowers whose income fell during the pause compared to their 2018 or 2019 tax return or who would benefit from submitting a married filing separate tax return should consider recertifying early.

Be ready and have a strategy so you can either refinance to record low rates or pay as little as possible with the help of a team like ours.