Here’s the way IBR is supposed to work. When you get onto this repayment plan, which caps payments at a percentage of your income, the Department of Education is supposed to contact the Internal Revenue Service each year to get borrowers’ income information to re-caluclate their annual monthly payment amounts. Once you’re on IBR, you stay on IBR unless you decide to switch repayment plans or you are no longer eligible due to your income.
Well apparently, the Department of Education is no longer contacting the IRS to obtain borrower income information, and is instead requesting income verification directly from borrowers. If borrowers do not respond, or borrowers never receive the request in the first place (which has been occurring), borrowers are bumped off of IBR, or they experience substantial and seemingly arbitrary hikes in monthly payment amounts. The payments will be reduced once the borrower “re-applies” for IBR, but the “gap” for processing time may mean temporarily higher monthly payments, or the borrower will have to go into temporary forbearance.
This is causing a lot of problems for borrowers- including me, since I am also on IBR. The National Consumer Law Center (NCLC) is trying to collect information on these problems in an attempt to work with the Department of Education to correct this. If you are experiencing problems of this nature, please email me at email@example.com. Include your name, your occupation, and a synopsis of your problem, and I will pass your information on to NCLC.