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Income-Driven Repayment FAQs

April 21, 2015

Income-driven repayment (IDR) plans are a great choice for borrowers who would like to make their student loan debt more manageable by reducing their monthly payment amount. Here are some questions we frequently receive from schools about IDR.

Photo credit: Colin Kinner, flickr

Photo credit: Colin Kinner, flickr

Q: What should we be telling students as to when and how to sign up for IDR plans?

A: Borrowers should be educated about their repayment options. We encourage our school partners to emphasize the importance of having a good relationship with their servicer. Schools can assist by familiarizing students on how to login to NSLDS in order to identify their servicer and obtain their latest loan information. Borrowers should be directed to their servicers to receive counseling on the best options for their specific situation.

Q: My institution requires students to complete the Department of Education online exit interview. That process requires the student to choose a repayment plan. Is this information automatically transferred to the servicer, and is the selected repayment plan applied to the borrower’s loans?

A: Yes, the information does get transferred to the servicer, who is required to use it. However if the borrower chooses IDR, it cannot be automatically applied without additional information and an application. If a borrower requests an IDR plan prior to 90 days from their entrance into repayment, we communicate the proper timing and procedures for doing so.

Within 60 days before their due date, the borrower will have to provide proof of income at the time of submission for the app. The borrower must qualify for Partial Financial Hardship every year. The borrower must provide income information using one of these methods:

  • Adjusted Gross Income (AGI)
    • Most recent federal income tax return, or
    • IRS tax return transcript, or
    • IRS Data Retrieval Tool (in the application)
  • If the borrower doesn’t meet conditions for documenting using AGI, they did not file an income tax return in the past two years, or their income on the most recent tax return is significantly different than their current income (such as in the case of unemployment)
    • Two of their most recent pay stubs
    • Alternative documentation of income

Q: If a student nearing graduation contacts Nelnet, what kind of guidance on IDR options will they receive?

A: Regardless of when the call occurs, we counsel borrowers based on their specific situation. We walk through their online account, have them look at their entire loan portfolio, explain payment options, and utilize calculators to counsel them on the best repayment plan for their situation. If they’re interested in IDR, we’ll go over the timeline for application and approval.

We inform borrowers on their account and repayment options using a variety of communication channels:

Have more questions? Feel free to contact your Regional Director or the School Service Center (866.463.5638).

 

Lou Murray, Regional Director, Nelnet Partner Solutions

Lou Murray, Regional Director, Nelnet Partner Solutions

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