Posted Date:April 13, 2012
| Author: | Jeff Baker, Director, Policy Liaison and Implementation, Federal Student Aid |
Subject: Income Documentation for the IBR Plan
This Electronic Announcement announces increased flexibility to lenders and servicers on the standards for accepting documentation of borrowers' income for IBR purposes.
In an Electronic Announcement we posted on June 12, 2009, we provided interim guidance to lenders and servicers regarding the documentation that is acceptable for the determination of a borrower's eligibility to repay their Title IV loans under the Income Based Repayment (IBR) plan, and in calculating the borrower's IBR repayment amount. The June 12, 2009, electronic announcement specifically provided that lenders and servicers may accept a copy of the borrower's most recent federal tax return with an original "pen and ink" signature on the copy. We further stated that, unless the lender has reason to believe that the information on the return is not accurate, it may rely upon the Adjusted Gross Income amount reported on the return for IBR purposes.
This Electronic Announcement modifies that guidance by providing that a lender or servicer may accept an unsigned copy of the borrower's tax return, unless the lender or servicer has questions about the validity of the copy of the tax return submitted by the borrower.
As noted in the 2009 Electronic Announcement, this guidance does not negate any other provision of the IBR regulations, including the provision that the lender may use documentation other than a tax return when it believes that the information on the tax return does not, or would not, reasonably reflect the borrower's current income.
We thank our lenders and servicers for their efforts to facilitate the ability of eligible borrowers to avail themselves of the IBR plan.