Create your very own Auto Publish News/Blog Site and Earn Passive Income in Just 4 Easy Steps
- Student loan borrowers now have until the end of September 2024 to update their income and family size information for IDR plans.
- Those who have not recertified but are scheduled to do so by March 2024 will receive a payment pause for this month to ensure correct payments, while those whose payments increased after recertification will revert to their previous payment amounts.
- The earliest date that changes to IDR plans have tax implications is now November 2024
The deadline for recertification of income-driven repayment (IDR) plans has been pushed back to the end of September 2024. Previously, borrowers had to recertify their income and family size for their IDR payments by March 2024. Due to loan processing issues, lack of communication and incorrect payment calculations, this date has now been postponed.
This decision, announced by the Department of Education, is part of ongoing efforts to help individuals return to student loan repayment following the disruptions caused by the COVID-19 pandemic.
Borrowers should find detailed information in the official announcement of student aid.
What is Income Recertification?
Student loan borrowers using income-driven repayment plans, including the new SAVE plan, must annually re-certify their income and family size to calculate their student loan payments.
If a borrower fails to re-prove their income, their monthly payment will revert to the higher amount of the standard repayment plan.
During the pandemic, the requirement for borrowers to submit income and family size information along with all student loan payments for IDR plans has been suspended.
When student loan payments resumed, the previous pre-pandemic information was used, allowing individuals to maintain their pre-pandemic repayment terms without the need for immediate updates. This pause has been extended to ease the pressure borrowers and loan servicers face in resuming student loan repayments.
New recertification schedule and new payment amounts
For borrowers whose IDR plans are set for annual recertification in March 2024, the Department of Education is taking measures to ensure that the lack of recertification does not negatively impact them. Specifically, individuals who have not submitted their recertification information within the previously communicated deadlines will benefit from a payment pause in March, allowing them to maintain their current monthly IDR payment amounts.
Additionally, for those who have undergone the recertification process and have experienced an increase in their monthly payments, the Department of Education will reset those payments to the amounts owed prior to recertification. Conversely, if recertification resulted in a lower or unchanged monthly payment, no adjustments will be made to the borrower's payment plan.
The recertification schedule is as follows: The annual recertification date is at the end of September 2024 at the earliest. This would mean that loan payments would not change until November. Coincidentally, the presidential election is in November, so there is a good chance that recertification will be postponed again.
Borrowers can expect to hear from their loan servicers about the recertification process three months before their IDR plan expiration date. They then have 35 days to submit their income information, with a final deadline of 10 days before their recertification date to ensure their monthly payments continue to be based on their income.
Final thoughts
According to the Department of Education, this extended recertification pause and accompanying measures reflect a comprehensive effort to support student loan borrowers through a transition period.
By providing additional time and flexibility for recertification, the Department of Education aims to ensure that borrowers can maintain manageable repayment plans tailored to their financial situation, ultimately contributing to their financial stability and success.
Don't miss these other stories:
Average student loan debt by state in 2024. Student loan servicer errors leave borrowers unsure. What is the SAVE repayment plan?
Create your very own Auto Publish News/Blog Site and Earn Passive Income in Just 4 Easy Steps
