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With the introduction of the new Revised Pay As You Earn (REPAYE) plan in December, and the subsequent release of a mind-bogglingly complicated new application for all income-driven repayment plans, I have been seeing significant processing delays and backlogs across the federal student loan servicing system. These problems are affecting borrowers who are applying for income-driven repayment plans for the first time, borrowers who are re-certifying their income to remain in their current income-driven plans, and borrowers who are requesting to switch to a different income-driven plan, such as REPAYE.
By way of background, income-driven repayment applications are supposed to be processed within about 10 business days. Servicers rarely have been able to have such a “rapid” turnaround in my experience, but they typically process applications within one billing cycle.
Since January, however, federal student loan servicers across the board seem to be taking 30-60 days or longer to process applications for income-driven repayment, pushing many borrowers into temporary forbearances if they cannot afford their normal monthly payments. This isn’t just for the new REPAYE plan, but also for borrowers on Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR). Agents for the following federal student loan servicing companies have all told me that they are experiencing significant backlogs and delays:
- FedLoan Servicing
- American Education Services (AES)
- Great Lakes Higher Education
If you have submitted an application or re-certification request for income-driven repayment, or you anticipate doing so soon, you should expect delays. Be sure to routinely follow up with your loan servicer to check on the status of your application, and stay on top of things to make sure your application gets processed.