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The Borrower Experience: Income-Driven Repayment

November 8, 2013

Planning_jpgBorrowers are showing a great amount of interest in the student loan repayment plans that allow them to base their monthly payment on the amount they earn, family size, and other criteria. The plans include Income-Based Repayment (IBR), Pay as You Earn, and Income-Contingent Repayment (ICR). It’s important to note that not every borrower is eligible for one of these plans, but those that are find their payments reduced compared to the ten-year Standard Repayment Plan. There are advantages and disadvantages to all of these plans, and Nelnet works with each borrower to make sure they are knowledgeable about each repayment option and how it may impact their individual situation.

The application process is simple, but borrowers must submit supporting documentation before their application is reviewed for approval or denial. Borrowers may apply for any of the Income-Driven Repayment plans at studentloans.gov. or contact their student loan servicer.

During the application process, the borrower is asked to complete an IBR/Pay As You Earn/ ICR Repayment Plan Request Form. The form asks whether the borrower or spouse has filed a federal income tax return for the two most recently completed tax years. If the answer is yes, the borrower must submit the appropriate tax forms.

However, if the borrower or spouse has not filed a federal income tax return for the two most recently completed tax years, but did have taxable income, the borrower must provide one piece of supporting documentation for each source of taxable income.

If the borrower or spouse did not have any taxable income during the two most recently completed tax years, as indicated by a response of NO to Items 10 or 11 on the IBR/Pay As You Earn/ ICR Repayment Plan Request Form, no additional documentation is needed.

A summary of the IBR/Pay As You Earn/ ICR Repayment Plan Request Form and detailed instructions of the documentation that is required, is summarized in Dear Colleague Letter GEN 12-22, which was published on December 19, 2012.

Should financial aid professionals need additional information on these repayment plans, they may contact the Nelnet School Services Center at 866-463-5638.

Borrowers are always encouraged to contact their respective servicers.

Don Buehrer, Regional Director, Nelnet Partner Solutions

Don Buehrer, Regional Director, Nelnet Partner Solutions

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