With student loan totals increasing every year, many borrowers are seeking student loan forgiveness options. If you serve in the military, you may be unaware of how many loan forgiveness programs there are.
A few programs and benefits that may be afforded to veterans and current service members include student loan forgiveness or discharge, student loan deferment, student loan refinancing and interest caps.
Read on to learn more about a few of the student loan forgiveness programs offered to members of the military:
Military Student Loan Forgiveness & Discharge
Not only could you enjoy several student loan benefits as a member of the military, but you may also be able to have your student loans forgiven altogether! Here are a few options to explore if you’re considering pursuing military or veteran student loan forgiveness:
Public Service Loan Forgiveness
One option that may be available to service members or veterans is Public Service Loan Forgiveness (PSLF). PSLF may be available to borrowers who:
- Work full-time for an eligible employer
- Make 120 qualifying payments
- Have Federal Direct Loans
Qualifying employers include government organizations, including branches of the military, the Department of Defense and Homeland Security and select nonprofit organizations.
To be eligible for this program, you must have one of the following Federal Direct Loans:
- Direct or Direct Unsubsidized Stafford Loan
- Direct PLUS Loan
- Direct Consolidation Loan
If you have FFEL or Perkins loans, you can consolidate them into a Direct Consolidation Loan to make them eligible. While working toward PSLF, you can also switch to an income-based repayment plan to potentially lower your monthly payments.
Service members should complete the PSLF loan certification form annually to verify that their payments will count toward PSLF. Additionally, if you change jobs but believe you may still qualify for PSLF, you should re-submit the form to remain eligible.
Once you’ve completed 120 payments, you can file to have their remaining balance forgiven. Unlike other military student loan forgiveness programs, the amount forgiven is not taxable.
National Defense Student Loan Discharge
Service members who were in a location that qualified for hostile-fire or imminent-danger pay may be eligible for the National Defense Student Loan Discharge. Only borrowers with Perkins loans are eligible for this program.
Those whose military service finished before August 14, 2008, can have up to 50% of their loans forgiven. Others who served after that time can have 100% of their loans forgiven.
Veterans Total & Permanent Disability Discharge (TPD)
Veterans who sustained a total disability due to military service may be eligible to have all their remaining federal loans forgiven through this program. To qualify, you can provide documentation from any of the following:
- U.S. Department of Veterans Affairs: Documentation must show that your disability is related to your time in the service or that you have an unemployability rating that prevents you from working.
- Social Security Administration: Either your SSA notice of award or Benefits Planning Query is often accepted as proof of total and permanent disability. In order to qualify, they must show that your next disability review is more than five years from the date of your last review.
- A physician: If a doctor provides documentation that states you cannot work due to a physical or mental impairment, you may be eligible for TPD.
Military Student Loan Repayment Assistance Programs
Different military branches offer various forms of student loan repayment assistance. Here are a few options that may help service members to speed up their student loan debt repayment:
Active Duty Army Student Loan Repayment
The Loan Repayment Program (LRP) forgives up to $65,000 worth of student loans for borrowers who agree to serve three years in the army.
The borrower must not have loans in default in order to qualify. This mostly applies to federal loans but may also include private loans on a case-by-case basis. The Loan Repayment Program must be part of the enlistment contract when the borrower first signs up.
The borrower must also have scored a 50 or more on the Armed Services Vocational Aptitude Battery (ASVAB) and be part of a critical military occupational specialty (MOS) when they enlist to be eligible.
Army Reserve Student Loan Repayment Program
Those who join the Army Reserve and serve for six years can have up to $20,000 worth of loans forgiven. Borrowers with private student loans may be eligible for forgiveness on a case-by-case basis.
Navy Student Loan Repayment Program
Sailors who serve for three years can have up to $65,000 worth of student loans forgiven. Only federal student loans are eligible to be forgiven, and only loans acquired before enlistment will qualify. The forgiven amount will still be subject to federal and state income taxes.
Air Force College Loan Repayment Program
If you serve in the Air Force for at least three years, you may be eligible for student loan assistance. Each year, the Air Force will pay off either 33.33% or $1,500 of your principal balance, whichever is greater. The program is capped at $10,000.
Air Force Judge Advocate General’s Corps (JAG) Loan Repayment Program
This program forgives up to $65,000 worth of student loans for those who work in the Judge Advocate General’s Corp (JAG Corp). JAGs must work for four years total to have that amount forgiven.
Coast Guard Loan Repayment Program
Service members in the Coast Guard may qualify for up to $30,000 in student loan assistance. Each year, you’ll receive up to $10,000 in student loan assistance until you reach the cap amount or your student loans are repaid.
National Guard Loan Repayment Program
If you enlist in the National Guard for at least six years, you could become eligible for up to $50,000 in student loan assistance. You must meet several eligibility requirements to qualify.
Health Professions Student Loan Repayment Program
Service members with medical training may be eligible for several different programs offering military student loan forgiveness.
Nurses who serve for two years in a Critical Shortage Facility (CSF) or an eligible school of nursing can have up to 85% of their student loans forgiven.
The Active Duty Health Professions Loan Repayment Program will forgive up to $120,000 of loans for doctors who serve for three years. The amount is disbursed in equal amounts each year.
The Health Professionals Special Pay bonus program forgives up to $75,000 for active-duty doctors and Army Reserve doctors who serve for three years.
Related: Student Loan Forgiveness for Nurses
Prior Service Soldier Loan Repayment Program
Military personnel who have served for a year or more in direct fire or imminent danger. To apply for this type of loan assistance, reach out to your student loan servicer directly.
Military Student Loan Debt Management Options
In addition to repayment assistance and forgiveness benefits, military service members and veterans can pursue several different options to streamline student loan repayment. Here are a few examples:
Servicemembers Civil Relief Act (SCRA) Interest Rate Cap
The Servicemembers Civil Relief Act allows veterans who are on active duty to have the interest rate on their student loans decreased to 6%. This applies to both federal and private loans. The interest rate deduction will be applied automatically on federal loans, but borrowers with private loans will have to file a request manually. The deduction will be retroactive for their full time on active duty.
This interest rate deduction can also apply to other loans, like auto loans, personal loans and credit cards.
In addition to the SCRA interest rate cap, federal law dictates that if you for served 12 months or more in a hostile area, you may qualify for a 0% interest rate on your federal loans for up to 60 months. This can also be applied retroactively, even if you’re no longer in the military. Veterans should contact their loan servicers to find out how to apply.
Income-Driven Repayment Plans
If you’re looking for a way to make your student loan payment more manageable, then consider applying for an Income-Driven Repayment (IDR) plan. These types of plans adjust your monthly student loan payment to a percentage of your income, often lowering the minimum payment.
Student Loan Deferment During & Following Active Duty
If you’re serving on active duty in the military, then you may not have to worry about making student loan payments right away. According to the Department of Education, active duty service members can defer their student loan payments until up to 13 months after active duty has ended. The government will also pay interest on select student loans during that time.
HEROES Act Waiver
The Higher Education Relief Opportunities For Students (HEROES) Act was written to ensure that military members could serve without jeopardizing their academic or financial futures. Specifically, it was designed to prevent students whose military service requires them to put their schooling on hold from incurring more student debt while they are away. Contact your lender and your school’s financial aid department to learn more about applying for a HEROES Act waiver.
Student Loan Refinancing
Because most loan forgiveness programs only apply to federal student loans, servicemembers with private loans must find other ways to decrease their debt burden.
Military members with private student loans can refinance them for a lower interest rate, lower monthly payment or both. They can potentially save thousands on interest if they refinance. Here are a few benefits of refinancing your student loans:
- Lower your student loan interest rate
- Reduce your monthly payment
- Change your student loan repayment term
- Consolidate student loans into one monthly payment
- Add or remove a cosigner
Be sure to research lenders’ student loan refinancing eligibility requirements if you’re considering this option.
Refinance Your Student Loans With ELFI
If you’re looking to speed up your student loan repayment journey, student loan refinancing could be the right choice for you. Whether you need to save money on your monthly payment or you’re looking to take the next step in your financial future, ELFI’s Customer Care team is ready to answer your questions.
You can also try ELFI’s Student Loan Refinancing Calculator* to see what you could save by refinancing with ELFI.