June 15, 2009 |
Interim Guidance Issued for IBR Repayment Income Documentation Utah Higher Education Assistance Authority reports that Federal Student Aid (FSA) has issued interim guidance for Federal Family Education Loan (FFEL) lenders regarding documentation that must be collected to determine a borrower’s eligibility for Income Based Repayment (IBR). The guidance is needed until a new Internal Revenue Service (IRS) electronic consent submission process is implemented. On October 23, 2008, final regulations were published for IBR requiring FFEL borrowers to provide consent for lenders to receive the borrower’s income information from the IRS. A paper based IBR consent requirement could overwhelm the IRS’s current paper process and result in delays in responding to IBR requests. In response to the concern, the IRS has begun development of a Web-based tax return disclosure consent submission process. However, it may take up to 12 months to implement. Until the new electronic process is in place, the interim guidance provides a mechanism for obtaining the documentation of income. At their option, FFEL lenders may accept from a borrower a copy of the borrower’s most recent federal tax return, once which must contain an original “pen and ink” signature. Lenders may rely on the Adjusted Gross Income reported on the return for IBR calculation purposes. The option provided by this interim guidance does not prohibit lenders from continuing to require the borrower to provide written consent for the disclosure of tax return information by the IRS. Income Based Repayment, available July 1, 2009, is a new repayment plan for FFELP borrowers. The repayment amount is calculated using the borrower’s income and family size. According to FSA, borrowers are generally eligible for IBR if their monthly repayment amount calculated under IBR is less than the amount calculated under a standard 10-year repayment plan. FSA’s Electronic Announcement of the interim guidelines can be found at http://ifap.ed.gov/eannouncements/061209IncomeDocIncomeBasedRepymtPlan.html. Any questions related to this Bulletin should be directed to UHEAA Policy and Training at 801.321.7166, or by e-mail to mjohnson@utahsbr.edu. |
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