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Features
This week's edition
On Wednesday of this week, a new repayment plan becomes available to student loan borrowers — Income-Based Repayment (IBR).
Income-Based Repayment: Not just another repayment plan
Financial aid administrators may be aware that IBR will benefit certain borrowers by minimizing monthly payments and by providing loan forgiveness in some cases. But the full potential of IBR to assist in default prevention has yet to become fully apparent. Educating borrowers about this repayment plan and its benefits, through the loan counseling process and other information dissemination efforts, will be key to realizing that potential.
Income-Based Repayment's benefits to borrowers
While much recent discussion about IBR has been focused on understanding and implementing the plan from a school, lender, servicer, or guarantor standpoint, it's important not to lose sight of the most important factor in the IBR equation: the borrower.
What lenders and servicers need to know about IBR
As schools and lenders implement IBR, TG wants to ensure that our customers understand the key components of the plan. This article discusses the fundamentals of IBR, examines how a lender or servicer can incorporate IBR into its processes, and addresses common questions about the treatment of interest capitalization, interest subsidies, and special allowance payments (SAP) in IBR.
How lenders are preparing for IBR
FFELP lenders and servicers are rapidly gearing up for the introduction of the new IBR plan. Preparations include system programming, call center workflow adjustments, and the creation of new materials to provide borrowers the information they need about IBR.
Claim requirements revised for IBR
Effective July 1, TG claims must begin collecting new data elements in order to facilitate implementation of IBR provisions.
Online resources for IBR
Schools and lenders can play an important part in educating borrowers about IBR by supplying information during exit counseling or directing borrowers to Web sites that provide comprehensive information. TG offers just such a Web site through TG Online.
IBR: An effective option to help medical students manage loans while completing residency
Effective July 1, 2009, the debt-to-income component is being eliminated from the HRD. Instead of requesting the HRD, many medical students performing residency will now be able to take advantage of IBR.
Change in IBR-related income documentation requirements
ED recently provided guidance on alternative documentation of a borrower's income for the purpose of determining eligibility for IBR. This guidance permitted the lender or loan holder to accept, in lieu of the IRS Form 4506-T, a copy (including both sides) of the borrower's most recent federal tax return (Form 1040, 1040A, or 1040EZ), with an original "pen and ink" signature on the copy.
IBR Alternative Documentation of Income form
The Team FFEL IBR Workgroup has made the interim Income-Based Repayment Plan Alternative Documentation of Income form available for industry use for the new IBR plan available to borrowers on July 1, 2009.
For questions about IBR
TG and other institutions offer a variety of online resources for serving your borrower needs and implementing IBR. Consider these tools as you have questions or need further assistance in your IBR efforts.
Federal Updates
Congress passes HEA technical corrections bill
On June 23, 2009, both the Senate and House approved H.R. 1777 — a bill to make technical corrections to the Higher Education Act of 1965 (HEA) — and cleared it for the White House.
TG Updates
TG closed Friday for July 4
TG will be closed on Friday, July 3, in observance of the July 4 holiday. TG will resume normal business hours of operation on Monday, July 6.
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