Millions of Americans enrolled in federal student loan repayment programs should remain aware of the annual recertification requirement. Failing to recertify an income-driven repayment (IDR) plan could put the borrower at risk of losing access to forgiveness opportunities. The annual recertification process is critical for maintaining reduced payments and eligibility for long-term debt relief under these plans.
Why It Matters
Income-driven repayment (IDR) plans provide a lifeline to borrowers by capping monthly payments based on income and family size, with the potential for loan forgiveness after 20 to 25 years of qualifying payments. However, failing to re-certify income and family size annually can result in significant payment increases and jeopardize forgiveness eligibility.
The Department of Education emphasizes the importance of timely recertification. Borrowers who miss deadlines risk having their payments recalculated to a higher amount, based on the total loan balance and a standard repayment plan, instead of their income. This not only increases monthly costs but also delays progress toward forgiveness.
What to Know
Overall, IDR plans are fairly popular, with almost 30 percent of borrowers enrolled in one in 2024 per data from the Office of Federal Student Aid. Once a borrower picks one of four available IDR plans, they begin the journey toward IDR plan forgiveness, or loan forgiveness after 20 to 25 years of qualifying payment. Recertification, or the annual check-in on key tenants that affect your income like family size, is an essential part of maintaining a track toward IDR forgiveness.
Michael Lux, an attorney and founder of The Student Loan Sherpa, shared a comprehensive outlook on the consequences of missing recertification for an income-driven repayment plan.
"For starters, failure to recertify can result in being placed on the standard repayment plan. For most borrowers, this is the most expensive of all federal repayment plans," Lux told Newsweek. He continued by highlighting another one of the most noteworthy consequences: interest capitalization.
"This is when unpaid interest gets added to your principal balance. When your interest capitalizes, you start paying interest on the interest, which is how debt balances can spiral out of control," Lux explained. "Lastly, because a failure to recertify on time means getting kicked off your current IDR plan, it also means that you pause monthly progress toward student loan forgiveness."
To stay enrolled in an IDR plan, borrowers must submit updated income and family size information each year. This can be done online through StudentAid.gov or by contacting loan servicers directly. Borrowers are encouraged to keep their contact information up to date to ensure they receive reminders about recertification deadlines.
Borrowers should also be aware that some programs, such as the Public Service Loan Forgiveness (PSLF) program, require simultaneous enrollment in an IDR plan to count payments toward forgiveness.
What People Are Saying
Michael Lux, an attorney and founder of The Student Loan Sherpa, told Newsweek: "One critical change that happened during the Covid-19 payment pause is that Congress authorized the Department of Education to automate yearly certifications. Borrowers who opt in can allow the Department of Education to collect updated tax information from the IRS each year. This ensures that yearly certification deadlines never get missed."
What's Next
Borrowers who may worry about missing a recertification should consider opting into the new, automatic refresh feature from the Department of Education. Experts encourage borrowers to monitor updates from their loan servicers and the Federal Student Aid website for the latest information.
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