Once in IDR/IBR/PAYE/REPAYE, Always in IDR/IBR/PAYE/REPAYE

“I got married” or “My income went up” and “they MADE me change repayment plan because I didn’t qualify anymore.”

No no no. They cannot make you do this. You are never forced to leave a federal repayment plan once you have been accepted for it, ever (unless you are not making your payments or don’t submit your annual income certification).

When in an Income-Driven Repayment (IDR) plan like IBR, PAYE, or REPAYE, payments may change annually—but the plan does not. People are more aggressive in negotiating their cable bill than they are in dealing with student loans servicers! Switching the acronym of your payment plan not only capitalizes your accrued interest but can easily cost could thousands or even tens of thousands of dollars.

If you lose your personal financial hardship while enrolled in IBR or PAYE, your interest capitalizes, but you’re not kicked out of the plan, and you are not forced to choose a new plan. Because you “no longer qualify” for the plan, your payments are capped at the 10-year standard repayment amount. “No longer qualify” is deliberating confusing phrasing. Yes, at this point, if you were to freshly apply, you would not qualify and would not be accepted into the plan. But guess what? You’re not applying, you’re just recertifying your income to determine your monthly payment amount. It doesn’t matter if you get married or if you win the lottery. Your plan is your plan until you choose otherwise. You don’t need to “qualify” anymore: once in IBR, always in IBR. Once in PAYE, always in PAYE.

People are being told during their annual income recertification that they need to switch from IBR and PAYE to REPAYE once they lose a PFH, and that is incorrect. All switching does is unnecessarily subject borrowers to uncapped higher monthly payments. The problem is, once you’ve switched to REPAYE on this bad advice, you can’t switch back (because you don’t qualify, see what they did there?).

You can never tell if this is ignorance or malevolence, but given that this is generally coming from FedLoan in the context of borrowers planning for PSLF, a “mistake” like this that results in borrowers spending more per month and getting less forgiven does look pretty suspicious.

Bottom line: This is just wrong. If you file your forms on time and make your monthly payments, your plan will never change.

Don’t let anyone tell you otherwise.

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