Thanks to a massive hacking attack on the IRS Data Retrieval Tool in March of 2017, the Federal Government has pulled the tool offline in order to evaluate the best next step in the process of securing taxpayer information from potential leaks.
Over 120,000 taxpayers’ personal information was apparently stolen from the tool during the breach, allowing whoever did the hacking to create fraudulent tax returns (and basically, steal tax refunds from taxpayers, plus cause the IRS a huge headache).
The problem with having this tool shut down is that millions of Americans use it to calculate information for their FAFSA applications, but many millions more use it to automatically certify their annual income with student loan servicers, which is a required part of the process for receiving Federal Student Loan Forgiveness Benefits.
Re-Certifiying Your Income Without the IRS Retrieval Tool
You’re probably asking yourself, if the Data Retrieval Tool remains down permanently, how can I re-certify my income for student loans?
Unfortunately, if the tool remains offline, you’ll have to perform the calculations by hand, and it’s not an easy process.
Keep in mind though that the key point of the process is to convince your student loan servicing company that your income hasn’t changed much in the past year (enough to get you to lose qualifications for whatever Student Loan Repayment Plan, or benefits package you’re currently utilizing).
And along those lines, the best way to figure out how you can re-certifiying your income without the IRS Data Retrieval Tool is to contact whoever services your student loans and ask them for instructions.
By law, they have to allow you to re-certify without the use of tax return information, using alternative sources like paystubs, account history, etc., but each servicer is going to have a slightly different requirement, so you’ll need to speak to them to figure out what exactly you need to do.
Since I know so many of you are borrowers under Navient, here’s a link to their page of instructions on how to re-certify for any of the Federal income-driven repayment plans.
What Happens if the Tool Remains Down Permanently?
Tons of media outlets are complaining about the fact that the closure of this single tool is requiring us to basically go back to the stone age, using pen and paper to make the appropriate calculations, but in my opinion, the big outrage shouldn’t be pen and paper vs. online, but the lack of a better alternative system in the first place.
There are huge implications for this system going down (whether it’s been taken down on purpose, like it has now, or it goes down by accident in the future), because the income-recertification process is needed to track and determine monthly student loan payments, and to ensure that your interest isn’t capitalizing on your debt.
Without this tool, millions of Americans are at a much higher risk for making a mistake during the calculations process, and failing to meet the deadline for re-certifying their income, which could cause them to lose out on thousands or even tens of thousands of dollars in student loan benefits.
What’s Being Done to Bring the Retrieval Tool Back?
Persis Yu, Director of the Student Loan Borrower Assistance Project at the National Consumer Law Center, has been fighting to get the Consumer Financial Protection Bureau (CFPB) and Department of Education (DOE) to reinstate the Tool, or some kind of replacement for it, but not had much luck as of yet.
Yu’s contention is pretty alarming, as she stated that “When things are good there are problems, so this is ultimately really concerning given that we know that this vital tool is down.”
And I fully agree with her, as I receive a daily torrent of comments from people attempting to navigate the complicated student loan processing system, and that’s while this tool is actually available to help them with all the paperwork.
Fortunately, I’m relatively confident that the CFPB and DOE will sort out a solution to the problem, as they too have gone on the record about the importance of the IRS retrieval tool.
In fact, internal CFPB reports have clearly documented that borrowers run into major trouble without access to the IRS Data Retrieval Tool, and have linked outages of the tool to significant delays and other problems (like overcharges, loss of benefits, etc.) for Federal student loan debt.
The CFPB typically finds student loan servicers to be the major source of the problem when events like this occur, as their contention is that the servicers themselves aren’t providing their borrowers with the right kind of information to deal with their loans, regardless of the availability of the IRS Retrieval Tool, making things even worse when that resource isn’t available.
What Comes Next?
The CFPB claims that it’s “closely monitoring” all Federal student loan servicers during the outage of the tool “to ensure that student loan borrowers are treated fairly”, but if we go by the prior track record of student loan servicers then I’m not all that hopeful that they’ll get their act together to provide borrowers with the right sort of assistance they need for this complicated process.
Rather, I think it’s far more likely that literally millions of Americans end up either failing to complete their income recertification, and end up losing access to beneficial Income-Driven Student Loan Repayment Plans, Forgiveness Benefits, and other benefits packages that require income certification as part of their eligibility restrictions.
One thing borrowers should keep in mind is that you definitely do have the right to document your income with other sources than your tax return, using things like pay stubs or direct deposit records between your employer and bank, so that you’re not completely out of luck when this tool goes down, but that it does all have to be done by hand, meaning that you’ll need to allocate more time to the process.
You are also supposed to be protected from any unexpected increases in your monthly payment amount, as well as capitalization on your loan’s interest while the loan is in forebearance, as long as you’re able to get your income recertification information submitted to your serciver on time, or within a grace period that gives you 10 more days past the deadline to finish your application.
What Should I Do?
If your income recertification deadline is approaching, then you need to get a quick handle on this process and contact your student loan servicer to ask what they’ll accept as a form of re-certification.
If they give you trouble, trying to violate your rights, then you’ll need to seek some kind of recourse to ensure they remain in line, and supportive of your needs, like by contacting the Consumer Financial Protection Bureau, or the Student Loan Ombudsman Group, to file a complaint or ask for assistance in negotiating with your servicer.
Bottom line – hope your recertification deadline doesn’t loom until after the IRS Data Retrieval Tool goes back online, because you may lose hours of your life to hunting down documents and details that would ordinarily be readily available to you, and completing hand-driven calculations that should all be done automatically.
What Comes Next?
There’s a Congressional Hearing today to discuss this problem, and attempt to find a resolution for the tool’s outage, but I’m not all that confident that it’ll get decided that quickly.
I will, however, be watching along on the live stream and will update you guys as soon as there’s anything to discuss about the issue.
On the bright side, if the IRS Retrieval Tool outage drags on long enough, perhaps it’ll stimulate an announcement about President Trump’s Student Loan Reform Plan, which is long overdue, and definitely should have been prioritized to be included within his first 100 days of office (my opinion).
It’s hard to tell whether or not something like this would raise enough ruckus to get the President to act, but even given Trump’s many flaws, I do think that he’s tracking public opinion and attempting to respond to the biggest concerns of the American people (whether or not he’s doing a good job of resolving those concerns is a conversation for another day…).
For now, we’ll all just have to sit tight and wait to see how things play out. Check back soon though, because I’ll issue an update to this situation as soon as I’ve got more information.