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Recertifying for IBR: is my current income “significantly different” than what I previously reported?
Hi Heather (and all),
For purposes of recertifying for IBR, and completing the application correctly, how should I compare my “current income” to the income reported on my “most recent federal income tax return” and decide whether the two things are “significantly different” (as it asks me to do on the IBR application)?
I looked for a definition of what constitutes a “significantly different” income in my master promissory note and at a lot of government pages about IBR, and could not find any guidelines at all.
Additionally, when I called FedLoan (my loan servicer) and asked them this question, the representative I spoke to told me that they would process the application regardless of what I chose about my income being significantly different or not, and that I should do whatever I feel most comfortable about, which wasn’t helpful at all.
Heather—what do you recommend we do, to make sure we are completing this aspect of the IBR application correctly?
So, I e-mailed the office of Federal Student Aid at the U.S. Department of Education my question:
I will be filling out the IBR Repayment Plan Request for annual recertification, and I have a question about question #9 (asked in Section 4 of the request), which asks:
“9. Is your current income or your spouse’s current income (if you completed Section 3 or file a joint federal income tax return) significantly different than the income used to determine the Adjusted Gross Income (AGI) reported to the IRS on your most recently filed federal income tax return?”
To make sure I answer question #9 correctly, I need to know the answer to this question: how do I determine whether my “current income” is “significantly different” from the AGI on my “most recently filed federal income tax return”??
...And this is the response I received [UPDATE! See post below, too!]:
From: StudentAid <StudentAid@ed.gov>
Date: Tue, Jul 15, 2014 at 10:51 AM
Subject: 77 RE: Form submission from: Contact Us
Thank you for your inquiry about federal student aid.
You must reapply for the Income-Based Repayment (IBR) Plan each year by submitting documentation of your adjusted gross income (AGI) and family size. Each loan servicer will have its own documentation process.
If you did not file a federal income tax return, or if you believe that your reported AGI does not reasonably reflect your current income, the loan servicer may use other documentation to verify your income. For example, if you are now unemployed or are earning significantly less than your reported AGI, the loan servicer may consider your current income in determining your IBR payment amount.
You should contact your loan servicer directly to obtain additional information and the appropriate forms.
We hope this information is helpful.
E-Mail Unit
StudentAid.gov
Federal Student Aid
...So, I must submit documentation of my AGI, but if I can’t or if I believe that my reported AGI does not reasonably reflect my current income, the loan servicer may use other documentation to verify my income. How do I utilize this information? Maybe by doing what this person (http://askheatherjarvis.com/forums/viewthread/9175/) did: select that my current income is not “significantly different” from the AGI on my most recent tax return on the application for annual re-certification, and then e-mail my loan servicer to inform them of any actual differences in my current income and my reported AGI, and leave the ball in their court to determine whether that difference is “significant”?
I also had asked the same question on Answers.Ed.Gov, as I wasn’t sure where I should direct my question, and it was forwarded to the office of Federal Student Aid at the U.S. Department of Education. So, I just got another response to them about the question I asked (see post above), which looks like it actually provides a clear answer (see sentence in italics and bold—my emphasis—below)!
From: “StudentAid” <StudentAid@ed.gov>
Date: Jul 16, 2014 7:45 AM
Subject: 77 RE: Incident #28022-32999 Forwarded Internally
Thank you for your inquiry about federal student aid.
Your loan servicer may use alternate documentation of income if it believes that your adjusted gross income (AGI) does not accurately reflect your current ability to make monthly payments. If you believe your income is significantly different and you want your servicer to consider your current income, you may answer yes. If the servicer agrees, it may choose to use alternate documentation of your income. The decision is made by the servicer, not the U.S. Department of Education.
This office answers general federal student aid questions. We do not provide loan account information or perform loan servicing requests. You should contact your loan servicer directly for additional assistance.
...
We hope this information is helpful.
E-Mail Unit
StudentAid.gov
Federal Student Aid
...I would be curious about any feedback or additional insight that you, Heather, or anyone else could offer on this. What do you think about this response? Have any of you contacted the U.S. Department of Education about this? If so, what have you heard back from them?