Complete Guide to Military Student Loan Forgiveness and Repayment

When Deborah Rykers graduated from college in 2008, she didn’t think she would spend eight years of her life in the United States Air Force. As an education graduate, that wasn’t her plan.

“An opportunity came my way, and I was recruited by a friend of mine,” said Rykers. “It was the best eight years of my life, but I wasn’t prepared to come back to civilian life, especially with the student loans I had taken out for my teaching degree.”

For many like Rykers, military enlistment can open up doors of opportunity and provide a fulfilling career. But one of the biggest drawbacks is being isolated from real world financial responsibilities like student loans, Rykers explained.

Rykers isn’t the only service member burdened with student loans. A 2012 study found that 41 percent of armed forces members held student loan debt, according to Reuters. Given the increase in student loan debt since that time, that number could be even higher today.

But there is good news for both active duty servicemen and veterans. Military student loan forgiveness, repayment relief, and refinancing options are available to those who qualify.

Here’s a list of options for military student loan repayment and forgiveness that will help you get out of debt fast.

Military student loan repayment assistance programs

What’s better than lower monthly payments or a reduced interest rate? How about no student loans at all?

There are several military student loan repayment assistance programs that can help eliminate some or all of your debt.

Army Student Loan Repayment: Active Duty

The Army Student Loan Repayment: Active Duty program offers military student loan repayment assistance to people on active duty. Among other requirements, you must enlist for at least three years and score 50 or higher on the Armed Services Vocational Aptitude Battery (ASVAB).

If you qualify, the Army will pay up to 33.33 percent of your principal balance each year for three years. You could receive up to $65,000 in loan assistance. Note that you can only use this money to pay off federal student loans, such as Direct, FFEL, and Perkins Loans. Private loans aren’t eligible.

Army Reserve College Loan Repayment Program

If you’re in a qualifying Military Occupational Speciality (MOS), you could get assistance through the Army Reserve College Loan Repayment Program. You must enlist for at least six years and have loans before you go on active duty.

This program will pay 15 percent of your loan balance for up to $20,000. It applies primarily to federal student loans, not to private ones.

Health Professions Student Loan Repayment Program

The Health Professions Loan Repayment Program helps doctors, dentists, and other healthcare professionals on active duty or in the Army Reserve. Qualifying borrowers can receive up to $40,000 per year for up to three years. This $120,000 in military loan forgiveness could go a long way toward paying off medical or dental school loans.

Prior Service Soldier Loan Repayment Program

Army Reserve soldiers with prior military service can receive up to $50,000 toward student loan payments. You can request more information about student loan forgiveness for veterans through the U.S. Army website.

National Guard Student Loan Repayment Program

Members of the National Guard could receive up to $50,000 in military loan forgiveness. You must enlist for a minimum six-year term of service.

Navy Student Loan Repayment Program

If you’re in the Navy, you could receive up to $65,000 in student loan repayment assistance. The Navy program helps sailors in the first three years of service.

Air Force College Loan Repayment Program

The Air Force College Loan Repayment Program (CLRP) is available to any person enlisting with past student loan debt. It awards up to $10,000, made in yearly payments of 33.33 percent of the debt or up to $1,500 — whichever is higher.

Air Force Judge Advocate General’s Corps Loan Repayment Program

If you join the Air Force Judge Advocate General’s (JAG) Corps, you could get up to $65,000 in student loan repayment assistance. You’ll receive payments over a three year period after your first year of service as a JAG officer.

Military student loan forgiveness and discharge programs

Loan repayment assistance programs give you money to help pay off your student loans, but forgiveness and discharge programs get rid of your loans completely. Below are three options for military student loan forgiveness and cancellation.

National Defense Student Loan Discharge

The National Defense Student Loan Discharge is designed to help those who have put their lives on the line for their country. To qualify, you must have served at least one year in an area deemed imminent danger or in direct fire and have a Perkins or Direct student loan.

The application for the discharge includes a Department of Defense form and a letter explaining why you believe you qualify sent directly to the servicers of your loan. The amount discharged is partial and varies, so it is best to contact your loan company.

Veterans Total and Permanent Disability Discharge

For those who have sacrificed so much, the Veterans Total and Permanent Disability Discharge is there to release you of your loans. To qualify, you must have a service-related disability documented by the Department of Veterans Affairs and been deemed permanently disabled. Most loans are eligible for military student loan forgiveness through this program.

Public Service Loan Forgiveness

Service to our country qualifies borrowers for one of the most popular student loan forgiveness programs — Public Service Loan Forgiveness. This program forgives all student loan debt after the borrower makes 120 qualifying payments while working full-time with the military or another qualifying non-profit.

Note that deferred payments do not count towards the 120 monthly payments and might extend your timeline to receive PSLF.

Other options for managing your student loan debt

Beyond military student loan forgiveness and repayment assistance, you have other options for making your student loans more manageable. The four approaches below can reduce your interest rate or lower your monthly payments. If you’re dealing with a lot of student debt, these four strategies could help ease the burden.

Cap interest through the Servicemembers Civil Relief Act (SCRA)

The Servicemembers Civil Relief Act could provide some relief from student loan debt. This act caps the amount of interest that can be collected on an active duty service person’s debt at 6.00%. This is especially good for borrowers with high-interest private loans, which often have higher rates than federal student loans.
For example, using our student loan payment calculator, a $20,000, 10-year loan at 8.5% interest has a monthly payment of $247. With the rate reduced to 6%, the monthly payment is lowered to $222. That’s a savings of $3,112 over the 10-year period. Apply those savings as extra payments on your loan and, you’ll cut a full year from your repayment plan.

To qualify for this benefit, your loans must be more recent than August 14, 2008. Contact your loan servicer for information about SCRA eligibility.

Defer your student loans while you’re on active duty

If you’re currently serving, your monthly payment doesn’t have to be a burden. The Department of Education allows you to defer your student loan payments during active duty service and 13 months after your return (or until you return to school with at least half-time status).

During this time, the government will pay the interest on your Federal Perkins, Direct Subsidized, and Subsidized Federal Stafford Loans while the principal is delayed. While you won’t pay your loans off any faster, you also won’t have to worry about accruing interest while your payments are paused.

This is not the case for unsubsidized loans, however. If you have an unsubsidized loan, you might benefit from using a student loan deferment calculator to see the amount of interest you will accrue while in deferment.

Lower your monthly payments with an income-driven repayment plan

Another way to manage your monthly payments is to apply for an income-driven repayment plan. These plans take into account your current discretionary income and family size in order adjust your monthly payments accordingly. In some cases, your new monthly payment could be as low as $0.

For example, Income-Based Repayment is one of the most popular plans. It limits your monthly payments to 10 or 15 percent of your discretionary income and results in forgiveness of any remaining debt after 25 years.

Overwhelmed by the thought of all the paperwork required to maintain enrollment? That’s where the Heroes Act Waiver comes in. With HAW, you’re not required to submit applications or proof of income during active duty periods. This means that even if your income increases, you can request to maintain the old, lower payment.

Note that this option does come with possible drawbacks. So always consider the pros and cons of income-driven repayment before enrolling.

Refinance your student loans for a lower interest rate

Whether you’re a civilian or an active duty member, an effective way to tackle student loan debt is by refinancing your loans. Refinancing is the process of paying off one or more student loans by obtaining a new, single loan through a private lender. Unlike the military loan repayment assistance program, refinancing applies to both federal and private loans.

Usually, the goal is to get a lower interest rate on the new loan, and in turn, enjoy smaller monthly payments. This move can save thousands of dollars in interest charges, too. You might also be able to extend your repayment period to lower monthly payments even more (though this could cancel out some or all interest savings).

It’s important to note that refinancing isn’t a magical solution to your debt problem and it’s not a great choice for all borrowers. There are several important pros and cons to consider, especially when it comes to refinancing federal student loans.

For example, refinancing federal loans with a private lender means permanently giving up access to government-backed benefits, including income-driven repayment options and the Public Service Loan Forgiveness Program.

However, if you have several high-interest loans or private loans — or don’t qualify for income-driven repayment — refinancing could be the answer to cutting the cost of that debt.

Student debt relief is available for servicemembers and veterans

Student loan debt shouldn’t be a burden to carry on and off the battlefield. The government has provided incentives, benefits, and student loan forgiveness for veterans and those on active duty.

“Without my student loans, I wouldn’t be a teacher today,” Rykers said. “But without my service, I wouldn’t be the person I am today.”

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