The Education Department Pledged to Simplify Income-Driven Repayment Applications, But It Hasn’t

The Department of Education said in April it would create a new application process for student loan repayment plans, which have changed multiple times due to various court cases. However, little progress has been made.

When the department announced that it would resume collections on defaulted student loans, it also said it would launch an “enhanced Income-Driven Repayment process” to support struggling borrowers. This new process would simplify enrolling in income-driven repayment plans and eliminate the requirement for borrowers to recertify their income every year.

At the time, the department said it would post more information about the new IDR enrollment process on StudentAid.gov the week of April 28, but Investopedia could not locate that information. The Department of Education would not confirm to Investopedia that it has, in fact, eliminated the recertification process.

However, the department did tell Investopedia that Federal Student Aid now allows borrowers to transfer their tax information from the IRS automatically to their income-driven repayment application, “thus simplifying the application for borrowers.”

The IRS retrieval tool makes it easier for borrowers to apply for income-driven repayment plans and recertify their income, but it is not an entirely new tool. The tool was introduced to income-driven repayment applications in 2023, but was paused in February to conform to a decision from a U.S. appeals court.

A Simpler Application Process Could Help Borrowers Amidst Changing Policies

While the Department of Education hasn’t delivered on most of its promises for a simpler application, constant policy changes have made the repayment process difficult for borrowers.

For example, the department has not eliminated recertification, which borrowers are asked to do yearly. If borrowers miss their recertification date, their payment could increase to the amount they would pay under a standard repayment plan, which would likely be significantly higher.

Additionally, loan servicers have struggled with changing income-driven repayment policies as lawsuits challenge the plans. The back-and-forth policies resulted in servicers having a backlog of over 2 million income-driven repayment applications at the end of April.

It’s also been difficult for many borrowers to resume repayments as changing policies create confusion. Still, the department has already started collecting millions in defaulted loans, and millions of borrowers are at risk of having their tax refunds and wages garnished.