Summary of Income-Driven Repayment Plans

Summary of Income-Driven Repayment Plans

While Income-Driven Repayment Plans aren’t right for everyone, they can help make your payments more affordable by basing them on your income and family size, rather than on how much you owe. To help decide if an Income-Driven Repayment (IDR) Plan is right for you, take a look at the pros and cons and remember to utilize our Student Loan Calculator to estimate your monthly payments.Big Boss vote

What do I do if my income or family situation changes dramatically before the annual recertification date?

What do I do if my income or family situation changes dramatically before the annual recertification date?

If your income or family situation changes drastically you may, but are not required to, request a different payment amount by submitting a new Income-Driven Repayment Plan request and selecting the option that indicates you are requesting a recalculation due to a change in your circumstances. Keep in mind that this will change the annual date on which your servicer certifies your annual income and family size. You can also elect to wait until your servicer requests your updated annual income and family size to provide any new information.

If you and your spouse file separate income tax returns

ICR Plan: If you and your spouse file separate income tax returns, your loan servicer will generally not consider your spouse’s income when determining eligibility or calculating your monthly payments. However, if you file joint income tax returns, your spouse’s income will be factored into eligibility and monthly payments unless you are separated or you can’t reasonably access your spouse’s income.

If your spouse also has eligible student loans, you may choose to repay your loans jointly with the ICR repayment plan. If you choose that option, your servicer will calculate separate payments for each spouse adjusted proportionally to each spouse’s share of the overall debt.

How does my spouse’s income and student loans affect my eligibility and payment amount? The answer to this question depends on the plan:

How does my spouse’s income and student loans affect my eligibility and payment amount?
The answer to this question depends on the plan:

REPAYE Plan: Whether you file a joint tax return or not, your spouse’s income is generally factored into your monthly payment amount unless you are separated or you can’t reasonably access your spouse’s income under this plan. If your spouse has eligible student loans also paid using the REPAYE plan, your servicer will usually automatically adjust your payment amount proportionally, based on each spouse’s share of the total loan debt.

PAYE and IBR Plans: If you and your spouse file separate income tax returns, your loan servicer will generally not consider your spouse’s income when determining eligibility or calculating your monthly payments. However, if you file joint income tax returns, your spouse’s income will be factored into eligibility and monthly payments unless you are separated or you can’t reasonably access your spouse’s income.

If you file a joint federal income tax return with your spouse, your loan servicer will use your combined eligible student loan debt when determining your eligibility. It will also automatically adjust your payment amount proportionally, based on each spouse’s share of the total loan debt. If you file separate federal income tax returns, only your student loan debt will be used when determining your eligibility for the plan, and there will be no adjustment to your payment amount, even if your spouse also has student loans.

How do loan servicers determine if I qualify as having “partial financial hardship?”

How do loan servicers determine if I qualify as having “partial financial hardship?”

To determine if you qualify for a particular repayment plan due to partial financial hardship, loan servicers will determine your potential monthly payment under that plan. If the monthly payment is equal to, or greater than, the monthly payment amount owed on the standard 10-year repayment plan, then you technically don’t have partial financial hardship. Conversely, if the payment you would owe on the repayment plan is lower than the amount owed on the standard plan, then you qualify as having partial financial hardship.