Student Loan Forgiveness and Repayment for Military and Veterans

Learn all about military student loan forgiveness and the best repayment assistance programs for you. Also, discover the deferment options available for military and veterans.

Updated by Gowtham Ramesh on 15th November 2019

There are multiple programs available for men and women enlisted in any military service which aids them in the payment of their education loans. Majority of the public are unaware of the financial help and benefits they could get after college, especially when it comes to the student loans. Although it changes, there are many programs available for the active-duty members and veterans. They can make use of these opportunities to get over all pending student loans.

The Military Service is qualified for the Public Service Loan Forgiveness as similar to other professionals such as Firefighters and Nurses. There are specialized programs exclusively for some servicemen.

There are options and opportunities for veterans too. Even though your debts are not forgiven, there are many options available to clear your student debts.


Table of contents


Military student loan forgiveness and discharge programs

Public Service Loan Forgiveness ( PSLF) is only applicable to the currently employed in the public service for a period of a total of 10 years. Other than that, there are several other programs offered to military and veterans for student loan forgiveness. They are given below. 

1) Department of Defense (DoD) Loan Repayment

The DoD repays those loans that are under the Federal Student Loan Repayment Program. In order to provide services to those people who have done their job well, some portion of their loan is forgiven. The DoD program pays up to $10,000 for the loans and this amount can be increased up to $60,000 in total as long as the holder remains in service for 3 years.

2) Veterans Disability Discharge

There are certain options available to veterans which could make them qualify for a student loan forgiveness without getting any consolidation. This is possible if the veteran has a service-connected disability. This program has been designed to give relief to veterans who cannot continue their duty as a result of a disability sustained during service.

3) National Defense Student loan discharge

This was designed to help those who were at the forefront of war, serving their country. To be qualified for this, you must have served for at least 1 year in the Imminent Danger Deemed Area and also hold a Perkins or Direct Student Loan.

Reduce the burden

Loan Forgiveness is not always the only way to find the relief that you seek from your student debt repayment. If you are not an active duty member due to any disability then there are plenty of programs designed to help you out.

4) Servicemembers Civil Relief Act (SCRA) Interest Rate Cap

Under this program, the interest rate is minimum and can be applied to all the federal and private loans. The interest rate is kept at 6% so that the loan does not increase immediately, following the active-duty service.

This helps the borrowers to get low-interest rates on loans and avoid the high-interest rate on loans offered by the private lending companies as the interest rate is said to be higher for private loans as compared to federal student loans.

This act was passed by President Bush back in 2003 long after the Soldiers and Sailors Civil Relief Act (SSCRA) of 1940.

Example - 

A $20,000 10-year loan at an 8.5% interest will have a monthly payment of $247. When it has been deducted to 6%, the monthly payment will be around $222, which leaves you with an overall saving of $3,112 for 10 years.

How to use the SCRA benefits?

If your student loan debt is charged above at an interest rate of 6% then it was created before the service.

To get the new interest rate, you need to contact your loan servicer in writing, making an official request to get a lower interest rate.

You will be receiving a reduced rate of interest for a period until you continue your service.

0% Interest

Your accrued interests on Direct Loan is eliminated for 60 months if you are in an active-duty service in any hostile area. However, this is only applicable to the Direct Federal Loan.

5) HEROES Act Waiver

The Higher Education Relief Opportunities for Students Act 2003 is a law that allows the federal or state government to publish waivers (modifications) to statutory or regulatory provisions applicable to the Title IV Federal Student Aid Programs.

The aim is to assist those affected individuals who are applicants of federal student aid and those who are also recipients.

The law gives authority to the US Department of Education to modify (waiver) regulatory provisions for the federal student loans when the borrower is serving in a wartime capacity, a military operation or during a time of national emergency.

Deferment options

In Deferment, there are 2 options for your student loan debt. These options can stop your payments for some period of time without any penalties.

  • The first option is for those on active duty service who are already making payments for their student loans. They can defer their payments for a specific time and they are not required to pay when there is war, national emergency or on an active operation.

  • The second option is for those students who are still in school and have a student loan. If you stop attending school at least for part-time then your loan repayment schedule will start. This deferment will allow you to serve on active duty without worrying about the student loan payment.


8 Best Military Repayment Assistance Programs

1 - Army Student Loan Repayment

This is offered only to military students on active duty for their loan repayment assistance. You are required to enroll for at least 3 years and should hold a score of 50 and above on the Armed Service Vocational Aptitude Battery (ASVAB).

If qualified, the army will pay up to 33.33% of your principal balance for every 3 years. With this, you could save about $65,000 on your loan. The saved money can only be used to pay off your federal student loans such as - 

  • Direct Federal Loans

  • Federal Family Education Loans (FFEL)

  • Perkins Loans

2 - Army Reserve College Loan Repayment Program

If you are in a qualified place of Military Occupational Speciality (MOS) then you could get support through the Army Reserve College Loan Repayment Program. To be eligible, you must be enlisted for 6 years and have pending loans before entering active duty.

This will help you to pay around 15% of your loan balance for the amount of $20,000. It is primarily focused on the federal student loan, not on the private student loan.

3 - Health Professions Student Loan Repayment Program

This program helps people from health professions such as Doctors, Dentists and other sector-related professionals who are in active duty or the Army Reserve on their student loan repayment. If you are a qualified borrower then you are entitled to receive up to $40,000 each year for three years.

The total amount of $120,000 for military loan forgiveness will go a long way towards paying off medical and dental school loans.

The loans that qualify for the program are - 

  • Stafford Loans

  • Private student loans

  • Grad PLUS Loans

  • Consolidation Loans

If you are in the skill shortage area as determined in the list of U.S. Military then you may stand a chance of getting this award. You also need to serve as a commissioned officer on active duty or in a reserve unit.

4 - Prior Service Soldier Loan Repayment Program

This program is exclusively for the Army Reserve Soldiers who have a previous military service history. They can receive up to $50,000 for their student loan payment.

Furthermore, you can request for more information on student loan forgiveness for the veterans through the official website of U.S. Army Website.

5 - National Guard Student Loan Repayment Program

This program is for the National Guards. They can receive around $50,000 on loan forgiveness. In order to qualify, you must be enrolled for no less than 6 years of service in a specific grade.

You should score at least 50 on the Armed Forces Qualifying Test (AFQT) to be eligible.

The loans that qualify for this program are - 

  • Stafford Loans

  • Grad PLUS Loans

  • Consolidation Loans

6 - Air Force College Loan Repayment Program

This program is available to anyone who has been enlisted with a past student loan debt. Servicemen are eligible to receive up to $10,000 as yearly payments of 33.33% of their debt.

To qualify for CLRP, members should be enlisted on active duty. The loans must not be in default and the borrower is responsible for the payment of interests and fees. The payments of the CLRP will be directly made to the lenders.

7 - Air Force Judge Advocate General’s Corps Loan Repayment Program

If you join the Air Force Judge Advocate General's (JAG) Corps, you will be receiving around $65,000 in student loan repayment assistance. The payment will be received over three years once you have finished your first-year service as a JAG officer.

Many Judge Advocates can also benefit from the Public Service Loan Forgiveness Programs (PSLF) and the Income-Driven Repayment Plans (IDR) of the College Cost Reduction and Access Act of 2007.

8 - The Coast Guard College Loan Repayment Program

The Coastal Guard has been receiving a good percentage of enrollment from reputed college graduates. They've been offered around $30,000 in loan forgiveness.

As similar to the Army, Navy and Air Force Loan Forgiveness, the benefits are provided after serving for one year.


Military student loan repayment benefits

There are tons of military student loan forgiveness benefits generally available for all sections through the Post 9/11 GI Bill or Montgomery GI Bill.

The Military College Loan Repayment Program (CLRP) is a popular loan forgiveness program. It provides around $65,000 in the form of school loan forgiveness after getting into the military and serving for some years.

Even though the CLRP seems like a great federal student loan forgiveness program for the military, it is not as good as the PSLF. This is because the IRS does not make the forgiven loans under PSLF taxable.

It means that loans forgiven under the PSLF are not taxable (you do not have to pay the forgiven loan as tax).


Military College Loan Repayment Programs

It is available to those who already have a student loan debt and are willing to join the military service for active duty. It is also for those who have served in the active duty and are now willing to reserve.

If you are not qualified for the CLRP, don't lose hope because you can still get in the PSLF which is a better version, compared to the CLRP program.

CLRP is available for most sections of the military which includes the Army, Navy, Airforce, National Guard, Coastal Guard, and reserves as well.

To be eligible you need to - 

  • Be enrolled in a Military for the first time or get in the reserve once if you have completed an active duty enlistment.

  • Be enrolled in a MOS which is considered for the eligibility in CLRP

  • Get a High School Diploma or a GED

  • Score 50 and higher in the Armed Force Qualification Test

  • Demand CLRP participation in writing the enlistment contract

  • Hold a student loan that can meet the guidelines of CLRP.

Other Blogs You May Be Interested In -


FAQ's

  Does the military pay off student loans for officers?


The student loan repayment program is an incentive for those enlisting into the military, unfortunately, it is not available for commissioned officers.

  Does the military pay off pre-existing student loans?


Through the army student loan repayment program, you can receive up to 33-1/3 percent or $1,500, whichever is greater, toward the unpaid principal balance of your student loans for each year of enlisted active duty.

  Can military service forgive student loans?


Military service qualifies for the forgiveness of your loans through PSLF. 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.

  Will the Air Force help pay off student loans?


Yes they will, through the Air Force CLRP Benefits. Although this program is nowhere near as valuable as the Army CLRP program or Navy SLRP benefits, it does provide up to $10,000 of annual loan repayments to help you pay back outstanding student loan debt, and it still appears to be fully funded for the year.