{"id":4883,"date":"2017-04-04T07:51:21","date_gmt":"2017-04-04T15:51:21","guid":{"rendered":"https:\/\/www.credible.com\/blog\/?p=4883"},"modified":"2022-01-12T13:22:10","modified_gmt":"2022-01-12T21:22:10","slug":"document-income-fafsa-idr","status":"publish","type":"post","link":"https:\/\/www.credible.com\/blog\/refinance-student-loans\/document-income-fafsa-idr\/","title":{"rendered":"5 ways to document income for the FAFSA or an IDR plan while IRS data retrieval is down"},"content":{"rendered":"

If you’re paying back student loan<\/a> debt in an income-driven repayment (IDR) plan like PAYE, REPAYE, or IBR, you need to recertify your income every year.\u00a0 Failing to recertify your income can get you kicked out of an IDR plan, and send your monthly payments soaring<\/a>.<\/p>\n

To simplify the process of documenting your income for an IDR plan, for the last several years the IRS has provided a convenient online tool that allowed you to import tax data from previous tax returns directly into your online application. This was a big time saver, and also prevented errors when entering information. With the IRS Data Retrieval Tool, it only takes about 10 minutes to recertify your income.<\/p>\n

The IRS Data Retrieval Tool was also used by millions of new and returning college students filling out the Free Application for Federal Student Aid, or FAFSA.\u00a0The FAFSA opens up the door not only to federal student loans and other aid, but financial aid from your state, college and other scholarship programs. The reason you have to document your income every year you’re in school is because much of this aid is need-based.<\/p>\n

The bad news is that the IRS Data Retrieval Tool on fafsa.gov and StudentLoans.gov was deactivated in March because of concerns that identity thieves were using it to obtain tax records and file fraudulent tax returns. According to recent testimony\u00a0<\/a>by IRS officials before the\u00a0House Committee on Oversight and Government Reform,\u00a0identity thieves may have accessed the personal information of as many\u00a0as 100,000 taxpayers and filed fraudulent tax returns claiming millions of dollars in refunds.<\/p>\n

Now the IRS<\/a> and the Department of Education say<\/a> that while security fixes are being implemented, the IRS Data Retrieval Tool probably won’t be back online until the start of the next FAFSA season, which begins Oct. 1, 2017.<\/p>\n[UPDATE<\/strong>: On June 2, 2017, access to the IRS Data Retrieval Tool was restored<\/a> for borrowers applying for an income-driven repayment plans on StudentLoans.gov. To address privacy and security concerns, tax return information is encrypted and hidden from the borrower’s view on the IRS DRT web page and the online IDR plan application. Some students filling out the 2018-2019 FAFSA starting Oct. 1, 2017 will be able to use the tool, but with certain limitations<\/a>.]\n

You can still file your FAFSA for the 2017-2018 school year online, but you’ll have to manually enter 2015 tax information. The same goes for student loan borrowers applying for or recertifying their enrollment in an income-driven repayment program.<\/p>\n

The Consumer Financial Protection Bureau warns that a flood of manual applications for enrollment and recertification in IDR plans could result in delays. But if borrowers submitted their paperwork on time, loan servicers aren’t supposed to change their monthly payments until they’ve processed their paperwork. Some borrowers say that their loan servicer has placed them in forbearance or put them back on the standard 10-year repayment plan, which can cause unpaid interest to be capitalized and push back the timeline for qualifying for loan forgiveness.<\/p>\n

Documenting your income for the FAFSA<\/h2>\n

The IRS offers this advice<\/a> for applicants filing a 2016-17 or a 2017-18 FAFSA application — both of which require data from your (or your family’s) 2015 tax return.<\/p>\n