Student loan tool set to come back online

Security breach forced IRS to take it offline in March.

Student loan borrowers seeking flexible repayment plans have been cut off from a helpful online tool for more than two months because of a security breach, but it is scheduled to be back and running by the end of May.

The Internal Revenue Service’s Data Retrieval Tool was taken offline by federal officials in early March after a security problem was discovered. The suspension of the tool was a blow not only to students and their families who use it to file crucial financial aid forms, but also to borrowers who use it to enroll in and manage flexible repayment plans.

The online tool automatically transfers information from a borrower’s tax returns, speeding the application process.

Those who use the tool, or DRT, as it is known, to apply for or renew flexible repayment plans can expect to do so again by the end of this month. That is when it will be partly restored with new security features, according to prepared congressional testimony submitted May 3 by James Runcie, chief operating officer of the Federal Student Aid office.

The news was welcomed by groups that support student aid, who said the loss of the tool had put many students and borrowers at financial risk. About 4.5 million people use the tool to apply for or update their eligibility for flexible repayment programs, Runcie said.

Students who use the tool to file the more widely used financial aid form known as the FAFSA, for Free Application for Federal Student Aid, however, must wait until October to use it again, according to federal officials.

Federal student loan borrowers are able to apply for various repayment plans that can drastically lower their monthly payments, depending on income. But to remain eligible for the lower payments, borrowers must recertify their income each year.

Typically, borrowers can do this quickly with the IRS tool, which automatically imports information from their federal tax return to their recertification form.

Without the tool, borrowers have had to take extra steps, like obtaining a copy of their tax return and filling in information manually. One concern is that borrowers will resort to paper applications, which are likely to take longer to process, said Persis Yu, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project.

In the past, loan servicers have had difficulty managing large volumes of paper applications, and borrowers have complained to the Consumer Financial Protection Bureau, Seth Frotman, the bureau’s student loan ombudsman, wrote in a letter to the borrower assistance program.

Two major federal loan servicers — companies that collect and manage loan payments — referred inquiries to the Department of Education, which did not immediately respond to requests for comment.