How to Apply for an Income-Driven Repayment Plan

If your federal student loan payments are too high, you could adjust them on an income-driven repayment plan. There are four income-driven plans for direct loans, all of which base your monthly payment on your income. Whichever plan you choose, it’s free to make your income-driven repayment plan request online or via mail.

Here’s what you need to know about submitting an income-driven repayment plan request form to make your student loan payments more affordable:

How to submit an income-driven repayment plan request

The easiest way to submit your income-driven repayment plan request is online on the Federal Student Aid website. The application process could take less than 10 minutes, but you should allow yourself as much time as you need to answer everything as thoughtfully and completely as possible.

Here are the steps you’ll need to follow to apply online:

• Head to Federal Student Aid, an official website of the U.S. Department of Education.
• Log in with your FSA ID. FSA ID stands for Federal Student Aid ID, a number used to verify your identity on StudentLoans.gov, as well as on other Department of Education websites.
• Use the IRS Data Retrieval Tool to transfer your Adjusted Gross Income from your most recent tax return. If this does not reflect your current income, you can choose to provide alternate proof (e.g., pay stub, letter from employer, proof of self-employment).

If you’d rather apply by mail, follow these steps:

• Ask your student loan servicer for the income-driven repayment plan form.
• Fill out the form, attach necessary documentation and mail to the address as instructed.
• If you need help in filling out the form, contact your loan servicer.

Which information you’ll need to provide

To be considered for an income-driven repayment plan, expect to be asked for the following:

1. Personal details, including name, Social Security number, address and phone number(s).
2. The type of income-driven repayment plan you are requesting. Alternatively, you can request that your loan servicer places you on the income-driven plan that would result in the lowest monthly payment.
3. Whether you have multiple loan servicers.
4. Whether your student loans are currently in deferment or forbearance.
5. Number of children in your family, including how many depend on you for more than half of their support.
6. How many other people live with you (besides your spouse and children) and depend on you for more than half of their support.
7. Your income:
   • If you filed a tax return in the last two years.
   • Whether your income has significantly changed since your last return.
   • If you currently have taxable income.
8. Your spouse’s information (if applicable):
   • The same questions as those listed above under your income.
   • Spouse’s personal identification information.
   • Whether your spouse has federal student loans.
   • Whether you filed your last return jointly.
9. Proof of income, for which you can use your adjusted gross income (AGI) from your last return. However, if that AGI does not reflect your current income, you can opt to provide alternative income documentation, such as a pay stub, a certified letter or statement from your employer or proof of self-employment income.

Once you have all your documentation in order, you can submit your income-driven repayment plan request form.

Why you’ll need to recertify every year

Over the course of a year, things could change that affect your income-driven repayment plan, such as your AGI and/or the size of your family. Both these factors help determine your monthly payment and, therefore, must be reassessed every year.

You must recertify your income-driven repayment every year, a process that is basically a reapplication for your income-driven repayment plan so that your monthly payment can be recalculated. Your loan servicer typically sends you a reminder notice when it’s time to reapply.

Of course, if there’s a major change in your financial situation before the year is up, you may not be able to wait. In that case, contact your loan servicer right away to request a recalculation of your monthly payment.

You may also be able to switch to a different income-driven repayment plan if it would make your monthly payments more affordable.

How to compare the income-driven repayment plans

Before you submit your income-driven repayment plan request, learn about your repayment options. You can choose from four main income-driven plans:

• Pay As You Earn (PAYE): This plan allows new borrowers who took out a federal student loan on or after Oct. 1, 2007 to make monthly payments that are either equal to no more than 10% of their discretionary income, or equal to or less than what they would pay on the 10-year standard repayment plan.
• Revised Pay As You Earn Plan (REPAYE): Similar to PAYE, this program allows borrowers to make monthly payments that are limited to 10% of their discretionary income. Unlike PAYE, however, eligibility is not restricted based on when they took out their first federal student loan.
• Income-Based Repayment (IBR): This plan lets borrowers with high student loan debt and a low discretionary or annual income to make monthly payments that are equal to 10% to 15% of their discretionary income, depending on the date of the borrower’s loan disbursement.
• Income-Contingent Repayment (ICR): This program allows borrowers to make monthly payments that are based on their family size, income and total debt, and will either equal 20% of their discretionary income or the amount of the payments that would be made if the borrower were on a fixed 12-year repayment plan, whichever is less.

Familiarize yourself with all these plans before making a decision, paying special attention to eligibility requirements, payment calculations, repayment periods and general pros and cons.

How to discuss your options with your loan servicer

After reviewing your income-driven repayment plan options, contact your student loan servicer to go over the plans in depth. No matter how confident you feel about one option or another, your servicer should be able to provide additional insight. This can help you make a more informed decision before you complete an income-driven repayment plan request form.

A high monthly student loan payment is a common financial struggle for many borrowers. You may qualify for an income-driven repayment plan, but don’t hesitate to investigate all your repayment options if payments are unmanageable and your financial health is at risk.

If you don’t think an income-driven repayment plan is the best option for you, you can also consider student loan refinancing or consolidation, which may potentially offer the relief you seek. If you do ultimately decide an income-driven repayment plan is right for you, following the above steps should make it easy to apply.