One of the open issues not initially addressed in the CARES Act was the Income Drive Repayment (IDR) Recertification process. Based on my conversations with the Department of Education, I have compiled an update on how this will work during the CARES grace period from March 15 to September 30. Here are the highlights:
- All recertification is extended 6 months
- You still have the right to recertify your loans during the CARES grace period
- Recertification uses the most current tax return on file.
- Extension of tax filing dates could also impact new payment
- Notification to borrowers has begun
IDR Recertification Is Extended 6 Months
If you are in repayment and using an Income-Driven Repayment method, you need to recertify your income each year to qualify for another year under that repayment method. Due to the CARES Act, this recertification has been extended for 6 months from your current recertification date.
Recertification During the CARES Grace Period
You may want to consider recertifying your loan repayment during the grace period since that process uses your most recent tax return information on file. You will still benefit from the non-payment until October 1. The advantage to recertify now may allow some people to use a lower-income number rather than recertifying at the later date when it will be using their 2019 income data.
Recertification Uses Current Tax Return on File
The recertification process uses the most current IRS tax information on file. If you are taking advantage of either the tax filing extension or the recertification extension then note that this could impact what tax information will be used. You should examine your options depending on a borrower’s recertification date and the tax information on file.
Impact of Tax Filing Extension on IDR
If you file your taxes electronically, it normally takes approximately 3 weeks to be recognized in the IRS system. If you submit via a paper submission, that can take up to 8 weeks for it to be processed. As stated above, an IDR payer may be able to maximize their new repayment by reviewing their recertification and income tax submission date.
Notification Has Begun
This was not initially addressed during the initial CARES Act suspension. All federal loan servicers should have contacted you via email or mail. If you are not sure who to contact then you should log into the National Student Loan Data System (NSLDS). You will need your FSA ID and Password. Your loan servicers are listed there under each loan detail.
IDR Recertification Summary
The student loan repayment and loan forgiveness processes are confusing. You need to be using an IDR method to qualify for Public Service Loan Forgiveness. Understanding the rules of the recertification process is important to minimize your monthly payments and maximize your qualifying credits.