Serving in the US armed forces is a life-changing decision. The military offers opportunities and experiences that few jobs can, but is also a dangerous and challenging career path. Some consider enlisting for the education opportunities available both while serving and after returning to civilian life.
If you have already completed your undergrad or graduate education and have student loan debt, you might be reviewing your personal finances and looking for loan forgiveness options or repayment plans through military service. Here we will outline the many programs that servicemen and servicewomen can consider for student loan forgiveness.
The Servicemembers Civil Relief Act (SCRA)
If you obtained student loans before enlisting, the Servicemembers Civil Relief Act (SCRA) could reduce the interest rate on your loans to 6% while on active duty. This isn’t just for student loan payments, but could also include car loans, mortgages, and credit cards.
Who is eligible for SCRA?
Both borrowers and cosigners or active servicemembers qualify for the interest rate cap. SCRA applies to both federal and private loans, originated on or after 8/14/08.
How to apply for SCRA?
You can either submit a copy of your orders to your loan servicer, or request verification through an authorized military database.
The Military College Loan Repayment Program (CLRP)
If you have already attended college and are considering joining the US military, the Military College Loan Repayment Program could be another reason to enlist.
CLRP does not cover a loan’s interest and that will still have to be paid out of pocket. Private loans are not eligible for forgiveness through the CLRP. If you are discharged or enlist in a different branch of service before your minimum contract has been met you may be required to pay back any payments made towards your loan balance.
To qualify, you must not have previous military experience before enlisting. Each branch will also have its own service requirements for CLRP as well, so it is best to reach out to your local recruiting office to be sure you and your loans qualify.
The Army Student Loan Repayment Program
Repayments through the Army Student Loan Repayment Program are issued for up to 33.33% of the current principal balance of the soldier’s federal student loans annually, or $1,500, whichever is greater, after their first year of service has been completed. Benefits cap out at $65,000 in total loan forgiveness. Reach out to your local recruiter for the full eligibility requirements, but you must enlist for at least three years and score 50 or higher on the Armed Services Vocational Aptitude Battery to qualify.
The Navy Student Loan Repayment Program
Like the Army program, repayments through the Navy Student Loan Repayment Program are issued for up to 33.33% of the current principal balance of the soldier’s federal student loans annually, after their first year of service has been completed. Benefits cap out at $10,000 in total loan forgiveness. You must enlist for at least four years to qualify, but reach out to your local recruiter for the full eligibility requirements.
The National Guard Student Loan Repayment Program
To qualify for the National Guard Student Loan Repayment Program, you must score 50 or higher on the Armed Services Vocational Aptitude Battery, enroll with eligible jobs through the Guard, and enlist for at least six years of service. The max amount you could receive in federal principal student loan repayments is $50,000, and you could earn up to $7,500 annually.
The Air Force College Loan Repayment Program
Repayments for the Air Force College Loan Repayment Program are issued for up to 33.33% of the current principal balance of the soldier’s federal student loans annually, or $1,500, whichever is greater, after their first year of service has been completed. Similar to the Navy’s program, benefits cap out at $10,000 in total loan forgiveness.
The Coast Guard Loan Repayment Program
The Coast Guard Loan Repayment Program can provide up to $30,000 in federal loan forgiveness for qualified individuals. To qualify, you must commit to a minimum service contract of three years, with a maximum of $10,000 to be paid to your loan servicer following your first year of service.
CLRP for Reserve Servicemembers
Not looking to enlist in active duty? The Army and Navy Reserves can provide up to 15% or $1,5000 (whichever is greater) in federal loan forgiveness annually for qualified individuals who are enlisting for the first time. You will have to have the loans before enlisting and sign on for at least 6 years of service. This benefit is capped at $20,000.
The Health Professions Loan Repayment Program
If you are a doctor, dentist, or another qualifying healthcare professional interested in active service or joining the Army Reserve, you might consider the Health Professions Loan Repayment Program as an option for federal student loan repayment.
Qualifying borrowers can receive up to $40,000 per year for up to three years of service. Reach out to your local recruiter for more information before enlisting.
If you are a medical professional looking for student loan forgiveness be sure to check out the blog post, Student Loan Forgiveness for Doctors and Other Healthcare Professionals.
National Defense Student Loan Discharge
If you have already completed your term of service in the US armed forces and spent a year or more of your service in hostile fire, you might qualify for the National Defense Student Loan Discharge program. The amount discharged varies, so contact your loan servicer and a rep from your branch of the military for support before filing your application.
Who is eligible for the Prior Service Soldier Loan Repayment Program?
This program was designed to provide federal student loan relief for service members who were served for a year or more in an area deemed imminent danger or in direct fire.
How to apply for the Prior Service Soldier Loan Repayment Program?
To apply you will submit and form from the Department of Defense and letter to your student loan servicer. This will include an explanation of your service, the time spent in direct fire, and why your loan should be discharged.
Public Service Loan Forgiveness (PSLF)
Public service includes full-time employment by a 501(c)(3) tax-exempt nonprofit or public institution, like the US military. It also includes working in areas that are underserved or have a high need for medical professionals. This program isn’t specific to active-duty service, but to many professions. While the timeline for forgiveness is longer than other federal options, your total balance could be forgiven at the end.
It is important to note that deferment pay periods do not count towards the 120 monthly payments and might extend your timeline to receive PSLF. Many enlisted in the military will defer payments while serving. Reach out to your student loan servicer to see how that affects your PSLF timeline.
Who is Eligible for PSLF?
Borrowers eligible for PSLF need to make 120 qualifying payments while working full-time for a qualifying employer. Only Federal Direct Loans are eligible for PSLF. The Federal Student Aid website includes complete descriptions of what a qualified payment, qualified employer, and full-time employment mean for PSLF applicants. However, the only way to be positive that you qualify for Public Service Loan Forgiveness now or in the future is to complete and submit the Employment Certification form as soon as possible.
How to Apply PSLF
After 120 qualifying payments (over at least 10 years), borrowers can apply for PSLF. The payments don’t need to be consecutive to apply. You can then fill out and submit a PSLF application to receive loan forgiveness.
The Veteran’s Total and Permanent Disability (TPD) Discharge
Veterans who have suffered injuries during their term of service that has caused total or permanent disability can apply for student loan discharge through the Veteran’s Total and Permanent (TPD) Discharge program. This would mean total loan forgiveness for federal loan holders who are not able to pay the balance back.
Who is eligible for TPD Discharge?
To qualify, you must prove your injury was sustained in service of the US military. Your TPD must also prevent you from being employed and able to earn the income needed for loan repayment.
How to apply for TPD Discharge?
The service member or their family should reach out to the Department of Veterans Affairs and US Department of Education to submit an application. With the application, you will need to submit documents on your TPD and how it prevents you from being employed.
This article was written by Carolyn Pairitz Morris, Senior Editor at Earnest.