I’ve blogged about Income-Based Repayment (IBR) several times over the past couple of years. It’s a fantastic program for federal student loan borrowers, where your monthly payment is calculated as a percentage of your adjusted gross income, regardless of how much you owe. For many borrowers, it’s the only affordable payment plan available.
Borrowers who are on IBR will see their payments adjusted annually based on income changes, which makes sense given that the plan is income-sensitive. In the past, the Dept. of Education would automatically keep borrowers on IBR and would simply get updated income information directly from the Internal Revenue Service. As I’ve blogged about extensively, since the Dept. of Education has outsourced federal loan servicing to private contractors, there have been numerous problems recently where borrowers are being kicked off of IBR because these servicers are no longer automatically getting income information from the IRS.
The bottom line seems to be this: for most people who have federal loans and are on IBR, you are going to have to affirmatively re-apply for IBR on an annual basis in order to avoid being kicked off and placed on the Standard repayment plan. Sometimes, the servicers will not even send you notice; you have to keep track of everything yourself. I have confirmed this with at least two servicers: www.MyEdAccount.com andwww.MyFedLoan.org (which handles borrowers potentially eligible for Public Service Loan Forgiveness). I do not know if this is the case for other servicers (such as Mohela), but I would bet it is. You should find out when your IBR “year” is up by contacting your servicer, and then plan ahead by submitting the appropriate forms and income documentation before your year is up.