If you graduated recently, chances are you’re gearing up to launch a new career and starting a new chapter. But for some others, graduating also means that it is time to start paying back your student loans. Maybe it’s time for you to start filling an income based repayment form.
If you have federal student loans, you are likely signed up for a standard 10-year repayment plan. Upon graduation, you begin making payments that will allow you to pay back your loans in 10 years.
However, most of us don’t make tons of money right after college ends. This is exactly what can make paying off student loans challenging. Changes to federal income-based repayment plans have helped relieve the burden of student loan payments.
If your loan payment plan is too high in proportion to your income, then qualifying for income-based repayment might be an option as the program is designed to give borrowers have manageable monthly payments they can afford.
What Is Income Based Repayment?
An income-based repayment plan adjusts your monthly student loan payments based on your discretionary income and family size. Essentially, if too much of your income is going straight to student loan payments, applying for an income-based repayment program, might make your monthly payments more manageable.
Depending on when your student loans started, either before 2014 or after, income-based repayment is either capped at 10% or 15% of your discretionary income. And after 20 or 25 years of qualifying monthly payments, anything you still owe will be forgiven.
If your income goes up and your calculated monthly payment on an income-based plan would exceed the amount you’d pay on the standard 10-year plan, then you’d be required to switch plans.
This is not true for every income driven repayment plan, though. If you are on an income-contingent or revised pay as you earn plan, instead of the income-based plan, you could end up paying more than the standard monthly payment if your income goes up.
Plan Income Based Repayment Form Sample
Plan Request Income Based Repayment Form
Income Based Repayment Public Sector Form
Income Based Repayment Self-Certification Form
Servicing Income Based Repayment Form
Student Loan Income Based Repayment Form
How To Start Filling Income Based Repayment Form
Before you apply for an income-based repayment program, you need to contact your loan servicer if you have any questions. Your loan servicer will help you decide whether one of these plans is right for you.
To apply, you must submit an application called the income based repayment plan request. You can submit the application online or on a paper form, which you can get from your loan servicer.
The program allows you to select an income-driven repayment plan by name, or to request that your loan servicer determine what income-driven plan or plans you qualify for, and to place you on the income-based plan with the most affordable monthly payment amount.
Keep in mind that If you have more than one servicer for the loans that you want to repay under an income-driven plan, you must submit a separate request to each servicer.
Adjusted Gross Income
When you apply, you’ll be asked to provide income information that will be used to determine your eligibility for the plan and to calculate your monthly payment amount under all income-driven repayment plans. This may be either your adjusted gross income or alternative documentation of income.
Your adjusted gross income will be used if you filed a federal income tax return in the past two years, and your current income isn’t significantly different from the income reported on your most recent federal income tax return.
You can provide your adjusted gross income in the following ways:
- Apply using the online Income-Driven Repayment Plan Request and use the IRS Data Retrieval Tool in the application to transfer income information from your federal income tax return.
- Use the paper Income-Driven Repayment Plan Request and provide a paper copy of your most recently filed federal income tax return or IRS tax return transcript.
Alternative Documentation
If you haven’t filed a federal income tax return, or if your current income is significantly different from the income reported on your federal income tax return, alternative documentation of your income will be used to calculate your monthly payment amount.
You can provide alternative documentation inthe following ways:
- If you currently receive taxable income, you must submit a paper Income-Based Repayment Plan Request with alternative documentation of your income.
- If you currently don’t have any income or receive only untaxed income, you can indicate that on the online or paper application. In this case, you’re not required to supply further documentation of your income.
It may take your servicer a few weeks to process your request, because they will need to obtain documentation of your income and family size. It all depends on whether you applied electronically or submitted a paper request of income based repayment form and whether you’ve submitted all required documents.
If you are currently repaying your loans under a different repayment plan, your loan servicer may apply a forbearance to your student loan account while processing your request for an income-driven repayment plan.
