Spotlight on Student Loans:

My taxes are done, what’s next? Income recertification?

Income recertification must be completed annually for those on Income-Driven Repayment (IDR) plans and is one of the most important regular tasks you perform while paying your federal direct loans (besides making payments, that is!). By filling out this form each year, your loan servicer is able to calculate how much you can reasonably pay and for which repayment plans you qualify. If you don’t submit the form, you may be placed on a plan that is actually less advantageous; this is especially a problem if you’re working towards Public Service Loan Forgiveness.

Since your income is certified according to your most recent tax return, it’s best to file the form as soon as last year’s taxes are accepted, right? Hit the brakes! You’d actually be “jumping the gun.” Your loan servicer is required to notify you when you need to recertify and there’s no incentive to do so before then. If your most recent taxes reflect a decrease in earnings, you may want to recertify early to lower your monthly payments, but if your income has increased, submitting your form ahead of time could also raise your payments. In short, (Add: if you’re pursuing PSLF) it’s usually best to simply wait until you’re prompted to recertify.

Right now, due to the COVID-19 pandemic, income recertifications have been put on hold under the national emergency forbearance. For borrowers whose loans are serviced by FedLoan—which includes anyone pursuing PSLF—your recertification has been extended by 20 months.

So, unless you’re taking advantage of the tax extension, enjoy the fresh spring air, the relief that tax season is over, and a little respite from student loan-related paperwork.