1 / 41

Direct Loan Income-Driven Repayment Plans

Direct Loan Income-Driven Repayment Plans . Rose Mary Stelma College Foundation, Inc. April 2013. Before We Talk About Income-Driven Repayment Plans . . . . . . . Do you know what types of repayment plans are available for Direct Loans – NOT just the income-driven plans?.

marvin
Télécharger la présentation

Direct Loan Income-Driven Repayment Plans

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Direct Loan Income-Driven Repayment Plans Rose Mary Stelma College Foundation, Inc. April 2013

  2. Before We Talk About Income-Driven Repayment Plans . . . . . . Do you know what types of repayment plans are available for Direct Loans – NOT just the income-driven plans?

  3. Repayment Plans For Direct Loans • Standard • Graduated • Extended • Alternative • Income-Based Repayment (IBR) • Income-Contingent Repayment (ICR) • Pay As You Earn

  4. Repayment Plans • Not all loans qualify for all repayment plans • All loans must be repaid under the same plan unless the loan type doesn’t qualify for the plan

  5. Income-Driven Plans • Income-Contingent Repayment (ICR) • Income-Based Repayment (IBR) • Pay As You Earn

  6. Income-Driven Plans – Quick Overview • Income-Contingent (ICR) – 1994 • Direct Loan Program only • Income-Based Repayment (IBR) – 2009 • Direct Loan and FFEL • Pay As You Earn – 2012 • Direct Loan Program only • New borrowers on/after 10/1/2007 who receive a disbursement on/after 10/1/2011

  7. Income-Contingent Repayment • Direct Loan borrowers with eligible loans • FFEL borrowers do notqualify for ICR • FFEL has Income Sensitive Repayment Plan

  8. ICR - Direct Loans That Qualify • All Direct Loans are eligible except • Parent PLUS Loans • Pre-7/1/2006 Direct PLUS Consolidation Loans • Direct Consolidation Loans made on or after 7/1/2006 that repaid parent PLUS loans are eligible

  9. ICR -Payment • Under ICR, borrowers pay the lesser of: • 12-year standard repayment schedule multiplied by income percentage factor (payment based on loan debt and income) or • 20% of discretionary income (payment based only on income)

  10. ICR – Discretionary Income • Borrower’s AGI minus 100% of the poverty guideline for the borrower’s state and family size • Example Borrower’s AGI $25,000 100% of poverty guideline $10,000 Discretionary Income $15,000

  11. ICR - Forgiveness • Remaining balance forgiven after 25 years of qualifying repayment • According to the IRS, the forgiven amount is considered taxable income

  12. ICR - Qualifying Payments • Qualifying Payments include: • Payments made under an income-driven plan • Payments under the 10-year standard repayment plan (or any other repayment plan with a payment amount at least equal to the 10-year standard plan amount) or • Economic hardship deferment

  13. Income-Based Repayment • Direct Loan and FFEL Program borrowers with eligible loans and • Their payments would be lower on IBR relative to what would have been paid under the 10-year standard repayment plan (called “partial financial hardship”)

  14. IBR – Loans That Qualify • All Direct and FFEL Program loans except • Parent PLUS loans • Consolidation Loans that repaid parent PLUS loans

  15. IBR - Payment • Under IBR, borrowers pay the lesser of • 15% of discretionary income (income-based payments) or • What they would have paid under the 10-year standard repayment plan (non-income-based payments)

  16. IBR – Discretionary Income • Borrower’s AGI minus 150% of the poverty guideline for the borrower’s state and family size • Example Borrower’s AGI $20,000 150% of poverty guideline $15,000 Discretionary Income $ 5,000

  17. IBR - Forgiveness • Remaining balance forgiven after 25 years of qualifying repayment • According to the IRS, the forgiven amount is considered taxable income

  18. IBR – Qualifying Payments • Qualifying Payments include: • Payments made under an income-driven plan • Payments under the 10-year standard repayment plan (or any other repayment plan with a payment amount at least equal to the 10-year standard plan amount) or • Economic hardship deferment

  19. Pay As You Earn • Direct Loan borrowers with eligible loans • Must be a new borrower on/after 10/1/2007 who received new loan on/after 10/1/2011 and • Payments would be lower on Pay As You Earn relative to what would have been paid under the 10-year standard repayment plan (called “partial financial hardship”)

  20. Pay As You Earn – Direct Loans That Qualify • All Direct Loans are eligible except • Parent PLUS loans • Consolidation Loans that repaid parent PLUS loans

  21. Pay As You Earn - Payment • Pay the lesser of • 10% of discretionary income (income-based payments) or • What they would have paid under the 10-year standard repayment plan (non-income-based payments)

  22. Pay As You Earn – Discretionary Income • Borrower’s AGI minus 150% of the poverty guideline for the borrower’s state and family size • Example Borrower’s AGI $25,000 150% of poverty guideline $15,000 Discretionary Income $10,000

  23. Pay As You Earn – Forgiveness • Remaining balance is forgiven after 20 years of qualifying repayment. • According to the IRS, the forgiven amount is considered taxable income

  24. Pay As You Earn – Qualifying Payments • Qualifying Payments include: • Payments made under an income-driven plan • Payments under the 10-year standard repayment plan (or any other repayment plan with a payment amount at least equal to the 10-year standard plan amount) or • Economic hardship deferment

  25. Recap of ICR Payment Amount • ICR - borrowers pay the lesser of: • 12-year standard repayment schedule multiplied by income percentage factor (payment based on loan debt and income) or • 20% of discretionary income (payment based only on income) • For more on income percentage factors in ICR, see 77 FR 30266, available at: https://federalregister.gov/a/2012-12420

  26. Recap of IBR Payment Amount • Under IBR, borrowers pay the lesser of: • 15% of discretionary income (income-based payments) or • What they would have paid under the 10-year standard repayment plan (non-income-based payments)

  27. Recap of Pay As You Earn Payment Amount • Under Pay As You Earn, borrowers pay the lesser of: • 10% of discretionary income (income-based payments) or • What they would have paid under the 10-year standard repayment plan (non-income-based payments)

  28. IBR/Pay As You Earn/ICR Plan Request Form – Electronic and Paper • Borrower Demographics • Name • Address • SSN • Telephone Numbers • Email Address

  29. IBR/Pay As You Earn/ICR Plan Request Form • Borrower can select plans for DL and FFEL • IBR • Pay As You Earn • ICR • I request that my loan holder determine which of the above plans I am eligible for, and place me on the plan with the lowest monthly payment amount.

  30. Borrower Income • Servicer uses borrower’s Adjusted Gross Income (AGI) when calculating discretionary income • Copy of most recently filed federal income tax return or IRS tax return transcript – last two most recently completed years

  31. Income Documentation • Uses same IRS data retrieval tool as FAFSA • Married borrowers requesting joint ICR who file separately must both provide a tax return

  32. Alternative Documentation of Income • If borrower did not file a federal income tax return OR • If AGI does not reasonably reflect borrower’s current income OR • If servicer asked borrower to provide alternative documentation of income

  33. IBR/Pay As You Earn/ICR Plan Request Form • No taxable income – sign the form and submit • Alternative documentation of income • One piece for each source of income (borrower and spouse if applicable) • Pay stub, letter from employer listing income, interest or bank statements, dividend statements, signed explanation listing income sources and name and address of the source

  34. IBR/Pay As You Earn/ICR Plan Request Form • Provide spouse information if • Filed a joint tax return and your spouse has eligible loans • Joint Direct or FFEL Consolidation Loan obtained with spouse. • Borrower and spouse have Direct Loans and both want to repay under the joint ICR option.

  35. Family Size • Borrowers must also annually certify their family size • If the family size question is blank, the loan servicer assumes a family size of one

  36. Recertification • Under all three plans, borrowers are required to submit updated income documentation annually • Failure to submit documentation timely will lead to: • A monthly payment amount that is what it would have been on the 10-year standard repayment plan (non-income-based payment) and • Interest capitalization

  37. Recertification • Loan Servicer provides a notice of deadline for submission of income documentation and consequences of failure to provide • If borrower submits documentation within 10 days of deadline, servicer will maintain current payment amount until documentation is processed

  38. Applying for Income-Driven Repayment Plans • Borrower can also submit documentation early, if their circumstances have changed, to receive a lower payment amount. • This changes the borrower’s anniversary date

  39. Regulatory References • Final regulations published: November 1, 2012 • Effective date: July 1, 2013 • These provisions were implemented early.

  40. StudentLoans.gov • Enhanced loan counseling information • Repayment estimator resources • Excellent tool for borrowers

More Related