Many of you have heard of Income-Based Repayment (IBR), the federal student loan repayment program that calculates your monthly payment based on your income. Every year, your monthly payment amount must be recalculated based on changes to your income and family size. This means that borrowers have to affirmatively re-apply for IBR and submit proof of income every year. The problem is that this process is not as easy as it should be, and there are often errors and delays that cause serious problems for borrowers. I experienced this myself last year when I reapplied for IBR.
I just successfully completed my own annual IBR re-certification for the next 12 months, andwhile I had some worries, it turned out just fine. I thought it would be a good time to provide some tips based on my own experiences. Following these pointers will not, of course, guarantee that things will go smoothly for you (trust me, if I could press a button to make federal loan servicing an efficient and pleasant process, I would). However, this may help:
- Know when your current IBR period expires. Your monthly payment amount under IBR lasts for 12 months, and at the end of that 12 month period, you will be automatically placed on the Standard repayment plan (often with much higher payments) if you don’t reapply for IBR and update your income information. Figure out when that deadline is, and mark your calendar.
- Reapply for IBR well before the end of that 12-month period. Your federal loan servicer is supposed to notify you 90 days in advance of the expiration of your 12-month IBR period so you can send in income documentation to remain on IBR for another 12-month period. Unsurprisingly, that does not always happen. Be proactive. Contact your servicer 3 to 4 months prior to the end of your current 12-month period (mark your calendar for that as well), get instructions on how to re-apply, and start the process.
- Don’t wait until the last minute. As soon as it is time to re-apply for IBR, do it. Do NOT procrastinate.
- Don’t forget to include proper proof of income with your application for IBR: either your tax return showing your Adjusted Gross Income for this year or the prior year, or other recent income documentation (such as a pay stub). The documentation cannot be too dated. Your servicer can provide you with specific requirements and instructions for income documentation.
- Follow up, follow up, follow up. Don’t just submit everything and assume that things will automatically go smoothly. It’s annoying, but you should follow up with your federal loan servicer regularly (I’d say every 2 to 3 weeks) to see where things are. The process can take anywhere from a couple of weeks to a couple of months, and you don’t want your application to get lost in a stack of papers on someone’s desk.
- If there’s a problem, get a manager involved. Front-line customer service representatives are often well-meaning and well-intentioned, but they may not be equipped to handle complicated servicing issues or questions. If something goes wrong, ask to speak to manager, they may be able to help you. And if things still don’t get fixed… well… I know an attorney who helps people with this stuff.
While these tips won’t ensure that everything goes perfectly, this may help reduce some of the headaches you could otherwise experience. Good luck!