Income Recertifications Are Back for the First Time Since 2020

Income recertifications are resuming for borrowers on Income-Driven Repayment (IDR) plans after a long deferral due to the Covid-19 pandemic. Just like monthly student loan payments and interest, borrowers’ annual income recertifications were frozen in 2020. When borrowers returned to repayment in late 2023, they resumed the monthly payment they had pre-pandemic, and the Biden Administration further extended recertifications while continuing to work out kinks in the student loan system. Those extensions have now expired, however, and now many borrowers will be updating their income for the first time since 2020, which could lead to significant leaps in their monthly payments.

How Can I Keep My Payment Low?

One would hope that, after five years—and staggering inflation, to boot!—most borrowers’ incomes have grown. Unfortunately, their student loan payments will jump up to meet their current income rather than increasing gradually like their salaries probably did. Depending on their situation, however, borrowers may be able to take steps to mitigate their rising payments.

• Hold off on filing your taxes. IDR plans are typically calculated off of your most recent tax return. If your 2024 adjusted gross income (AGI) will be higher than it was in 2023, you should wait to file so that you can use last year’s taxes for your income recertification.
• File your taxes before you certify. If you changed jobs, lost a job, or had any other situation in which your income went down from 2023 to 2024, you will want that to be reflected in your monthly student loan payment. Since you have to file taxes anyway, you may as well get it over with and kill two birds with one stone.
• If you’re married, consider filing separately. When married filing jointly, your entire household income can be considered for your student loans, majorly inflating your payment. Talk to your student loan professional and a tax expert to compare options between the two filing options.
• Use a pay stub to recertify rather than your taxes. If your income has gone down recently and you expect it to be lower in 2025 than it was over the last two years, you can submit a pay stub for recertification rather than your tax return. Whether you lost a job, took a lower-paying job, or did extra work to make more money in past years but don’t expect to this year, your pay stubs are an acceptable alternative to your tax return.

Income Recertification and SAVE

If you’re one of the millions of borrowers who applied for a SAVE plan, you’re in a little different situation. While the plan is frozen in the courts, unlikely to see implementation under the new administration, borrowers on SAVE are essentially in limbo. In addition to being in administrative forbearance, recertifications have been pushed out until February of 2026. While this may be a boon to some, those borrowers are also not advancing toward PSLF or IDR Forgiveness. In order to get back on track for forgiveness, borrowers on SAVE will need to switch to one of the currently available IDR plans, but they will have to update their income to apply.  

Give us a call and we can help you figure out how best to coordinate filing your taxes with your income recertification, especially if you need to switch IDR plans. Now is also a good time to think about doing whatever you can to limit your tax liability for 2025 [link to 01.06.2025 tips post] so you can keep your student loan payment low for next year!

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