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(Loans) Subject: Loan Servicing Information - Availability of Pay As You Earn Repayment Plan and Electronic IBR/Pay As You Earn/ICR Repayment Plan Request (Updated January 11, 2013)

Posted Date:December 21, 2012

Author: William Leith, Service Director, Program Management, Federal Student Aid

Subject: Loan Servicing Information - Availability of Pay As You Earn Repayment Plan and Electronic IBR/Pay As You Earn/ICR Repayment Plan Request (Updated January 11, 2013)

Note: On January 11, 2013, we informed the community of Federal Student Aid's readiness to work with all Federal Family Education Loan (FFEL) lenders and lender servicers and assist them in becoming participants in the Electronic Income-Based (IBR)/Pay As You Earn/Income-Contingent Repayment (ICR) Repayment Plan Request process. For more information about participation in the electronic process, refer to 011113LSIPOC4FFELendersandLenderServicersInterestedinElectronicIBRPay.html.

We are pleased to announce the availability of the Pay As You Earn Repayment Plan for eligible William D. Ford Federal Direct Loan (Direct Loan) Program borrowers. On November 1, 2012, the Department of Education (the Department) issued final regulations for this new repayment plan based on the President's "Pay As You Earn" initiative and announced its intention to implement the plan as soon as possible (77 FR 66087). On December 7, 2012, the Department issued a notice designating the amended Direct Loan Program regulations at 34 CFR 685.208(k)(1) and 685.209(a) for implementation beginning on December 21, 2012, at the discretion of individual borrowers (77 FR 72960). This means that eligible Direct Loan borrowers can be placed on the Pay As You Earn Repayment Plan beginning on December 21, 2012.

Pay As You Earn Repayment Plan

The members of our federal loan servicer team are ready to work with Direct Loan borrowers who wish to apply for the Pay As You Earn Repayment Plan. If a borrower's student loan debt is high relative to his or her income, and depending on when the borrower has taken out federal student loans, the borrower may qualify for the Pay As You Earn Repayment Plan. The plan helps keep the borrower's monthly student loan payments affordable, and usually has the lowest monthly payment amount of the repayment plans that are based on the borrower's income. Most Direct Loans—except for Direct PLUS Loans for parents and Direct Consolidation Loans that repaid PLUS loans for parents—are eligible for Pay As You Earn.

Complete information about the Pay As You Earn Repayment Plan is available on the Pay As You Earn Repayment Plan page of the StudentAid.gov Web site. This information includes a detailed explanation of the Pay As You Earn Repayment Plan, a list of eligible loans that may be repaid under the Pay As You Earn Repayment Plan, and a calculator that can be used to estimate a borrower's eligibility for and initial monthly payment amount under the Pay As You Earn Repayment Plan.

In addition to reading the information available on the StudentAid.gov Web site, we strongly encourage each borrower to contact the federal loan servicer that services the borrower's Direct Loans to learn more about the Pay As You Earn Repayment Plan. A borrower's servicer is the best resource to help the borrower understand repayment plan options and determine which plan is right for the borrower.

In late January 2013, our federal loan servicers will begin to report the code "PA" to the National Student Loan Data System (NSLDS) when a borrower is repaying a Direct Loan under the Pay As You Earn Repayment Plan. School users will see the code when they access the Loan Detail Page on the NSLDS Professional Access Web site. In addition, school users will see the code reflected on the School Portfolio Report (SCHPR1) and the Delinquent Borrower Report (DELQ01). We will inform the community of the new code's implementation through future communications posted on the Information for Financial Aid Professionals (IFAP) Web site.

Electronic IBR/Pay As You Earn/ICR Repayment Plan Request

To assist borrowers in applying for the Pay As You Earn Repayment Plan, as well as the two other "income-driven" repayment plans—the Income-Based Repayment (IBR) Plan and the Income-Contingent Repayment (ICR) Plan, we have implemented an Electronic IBR/Pay As You Earn/ICR Repayment Plan Request on the StudentLoans.gov Web site. The Electronic IBR/Pay As You Earn/ICR Request has replaced the Electronic IBR Application that we implemented in September 2012.

The new Electronic IBR/Pay As You Earn/ICR Request functions in the same way as the previous Electronic IBR Application. The request interfaces with the NSLDS and, at the borrower's request, the Internal Revenue Service (IRS) to streamline the application process for the majority of borrowers who choose to repay their eligible Direct Loan and/or Federal Family Education Loan (FFEL) program loans under IBR, Pay As You Earn, and/or ICR.

A borrower will use the Electronic IBR/Pay As You Earn/ICR Request to complete the following actions that will ultimately be evaluated by the borrower's servicer:

  • Initially apply to repay under IBR, Pay As You Earn, and/or ICR

  • Subsequently meet the selected plan's annual income documentation requirement

  • Subsequently request the recalculation of the borrower's monthly payment amount due to a change in circumstances

In the attachment to this announcement titled "Electronic IBR/Pay As You Earn/ICR Repayment Plan Request," we provide a high-level summary of the request and its associated process. Within the attachment, we cover the following information:

  • Electronic IBR/Pay As You Earn/ICR Request Submission Criteria

  • Electronic IBR/Pay As You Earn/ICR Request Process

  • Additional Actions Needed by Certain Borrowers

  • Access to Submitted Electronic IBR/Pay As You Earn/ICR Requests

  • Contact Information for Borrowers

Contact Information

We understand that borrowers will contact members of the financial aid community with questions about the IBR, Pay As You Earn, and ICR plans and the Electronic IBR/Pay As You Earn/ICR Request. We hope you find the attached information helpful in answering their questions and appreciate the assistance you will provide in referring borrowers who contact you as follows:

IBR, Pay As You Earn, and ICR Plan Information

Electronic IBR/Pay As You Earn/ICR Request Technical Assistance

  • A borrower who is logged in to StudentLoans.gov and completing the Electronic IBR/Pay As You Earn/ICR Request may request technical assistance by clicking on the Contact Us tab in the top menu bar of the StudentLoans.gov Web site. The borrower can 1) complete and submit the feedback form or 2) click on Additional Information and contact Applicant Services at the phone number provided.

  • A borrower who has completed the Electronic IBR/Pay As You Earn/ICR Request and received a confirmation page must request assistance from the servicer or servicers identified on the confirmation page.

Last Modified: 12/20/2012