O C F I T B L O G Investment Income-Driven Repayment Plan Recertification Pause Extended

Income-Driven Repayment Plan Recertification Pause Extended

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Key Points

  • Student loan borrowers now have until late September 2024 to update their income and family size information for IDR plans.
  • Those who have not re-certified but we’re supposed to by March 2024 will receive a payment pause for this month to ensure accurate payments, while those whose payments increased after recertification will be reverted to their previous payment amounts.
  • The earliest date changes to IDR plans will tax effect is now November 2024

The deadline for the recertification of Income-Driven Repayment (IDR) plans has been pushed to late September 2024. Previously, borrowers would have had to recertify their income and family size for their IDR payments by March 2024. However, due to a myriad of loan servicing 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 the ongoing efforts to support individuals as they transition back to repaying student loans following the disruptions caused by the COVID-19 pandemic.

For detailed information, borrowers are encouraged to visit the official student aid announcement.

What Is Income Recertification?

Student loan borrowers who are on income-driven repayment plans, including the new SAVE plan, must re-certify their income and family size annually to calculate their student loan payments. 

If a borrower fails to re-certify their income, their monthly payment will default back to the higher Standard repayment plan amount. 

During the pandemic, the requirement for borrowers to submit their income and family size information for IDR plans was paused, along with all student loan payments.

As student loan payments resumed, the previous information from before the pandemic was used, allowing individuals to maintain their pre-pandemic repayment terms without the need for immediate updates. This pause has been extended to alleviate the pressures faced by borrowers and loan servicers as they resume student loan repayments.

New Recertification Timeline And Payment Amounts

For borrowers whose IDR plans were set for annual recertification in March 2024, the Department of Education is taking steps to ensure that the lack of recertification will not negatively impact them. Specifically, individuals who did not submit their recertification information by the previously communicated deadlines will benefit from a payment pause in March, allowing them to maintain their current IDR monthly payment amounts.

Moreover, for those who underwent the recertification process and saw an increase in their monthly payments, the Department of Education will revert these payments to the amounts due before the recertification. Conversely, if the recertification resulted in a lower or unchanged monthly payment, no adjustments will be made to the borrower’s payment schedule.

The timeline for recertification has been laid out as follows: annual recertification date not occurring until late September 2024 at the earliest. This would mean loan payments would not change until November. Coincidently, the Presidential Election is in November, so there’s likely a strong chance that recertification will be postponed again.

Borrowers can expect to hear from their loan servicers about the recertification process three months prior to their IDR plan’s expiration date. They will then have a 35-day window to submit their income information, with a final deadline 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 pause on recertification and the accompanying measures reflect a comprehensive effort to support student loan borrowers during a period of transition. 

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 situations, ultimately aiding in their financial stability and success.

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Editor: Ashley Barnett

Reviewed by: Colin Graves

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