How forgiveness and repayment of military student loans work


Student debt is a pervasive problem in our society, and even our men and women in uniform are not spared. But the good news for these people is that there are a number of military loan cancellation and repayment programs to help them pay off student loan debt faster. You might even be able to get your student loans paid off in full.

– Below, I explain the various student loan cancellation and repayment programs available to military and veterans. It should be noted that all of this information applies to federal student loans. Private student loans are issued by private banks and the government does not have the authority to pay off these debts.

Military College Loan Repayment Program (PRLA)

The Military College Loan Repayment Program (PRLA) is available to students who have already accumulated student debt and wish to enlist in the military on active duty. Military personnel leaving active service and joining the reserves may also be eligible.

Additional eligibility requirements include:

  • Be in a military professional specialty (MOS) eligible for CLRP
  • Have a high school diploma – not a GED or equivalency test
  • Have an eligible student loan (Federal Direct Loan, Federal Family Education Loan, or Perkins Loan that is not in default)
  • Get at least a 50 in the Armed Forces Qualification Test
  • Request the participation of the CLRP in your enrollment contract

The amount of money you can get through the CLRP depends on which branch of the military you are in and whether you are on active duty or in the reserve. Here is an overview of how the CLRP works for each branch of the military:

  • Army: Members of the military on active duty are eligible for student loan repayment assistance of up to $ 65,000. You must agree to enlist for at least three years. After your first year of service, the military will pay 33.33% of your outstanding student loan balance or $ 1,500, whichever is greater. It will also pay you one of these two amounts for each of the following two years.
  • Army reserves: Army Reserve members can receive up to $ 20,000 in student loan repayment assistance. You must enlist for at least six years and after your first year, the military will repay 15% of your outstanding loan balance or $ 1,500, whichever is greater, each year while you are in the reserve. military or until you hit the $ 20,000 cap. .
  • Marine: Members of the Navy are entitled to the same benefits as members of the military, except that they must accept at least four years of service when enrolling.
  • Navy Reserves: The CLRP program for Navy Reserve members is similar to that for Army Reserve members, except that the lifetime benefit is capped at $ 10,000 instead of $ 20,000.
  • Aviation: Air Force members are eligible for student loan repayment assistance of up to $ 10,000 if they enlist for at least three years. After your first year, it will pay the greater of 33.33% of your outstanding principal balance or $ 1,500. You are paid each year thereafter until your loan is paid off or you reach the limit of $ 10,000.
  • Marines: Unfortunately, there is no CLRP for the Marines.
  • National Guard: Members of the National Guard could receive up to $ 50,000 in student loan repayment assistance when they enlist for at least six years. The qualification requirements are more stringent than for other branches of the military and differ for prior service members, soldiers without prior service and current members of the National Guard.
  • Coast Guard: The Coast Guard is offering up to $ 30,000 in student loan repayment assistance to new members. You are entitled to up to $ 10,000 after your first year of service and can receive benefits for up to six years if you do not reach the $ 30,000 limit first.

Note that the CLRP only gives you money for your principal loan balance. He won’t pay for any student loan interest, so you will always have to pay for this yourself. However, as the principal balance decreases, the rate of increase in the overall balance will also increase, which will still save you money in the long run.

The money you receive through the LRBP is taxable, which could increase your income tax for the years in which you receive repayment assistance. The government automatically withholds 28% of its payment, which should cover your tax liability in most cases. But it also means that you won’t receive all of the amounts listed above because some of that money goes directly to taxes.

Withdrawal of the National Defense Student Loan (NDDSL)

You may be eligible for partial cancellation of your student loan under the National Defense Student Loan Release Program (NDSLD) if you have served for at least a full year in an area of ​​imminent danger or fire. hostile.

If you think you are eligible for NDSLD, all you need to do is complete the appropriate paperwork and write a letter explaining why you think you are eligible for the program. Your loan will likely not be fully paid, and the amount forgiven will depend in part on your student loan manager. Contact your service agent directly to determine how much of your student debt he can write off.

Waiver of total and permanent disability for veterans

If you become permanently disabled in the performance of your duties, the government will pay off all of your federal student loans. To be eligible, you must have a documented service-related disability and be considered permanently disabled by the Department of Veterans Affairs.

Public Service Loan Discount (PSLF)

Public Service Loan Discount (PSLF) is not just for the military. People like doctors, teachers and civil servants can also take advantage of this program. To be eligible, you must have a qualifying federal student loan and a qualifying repayment plan. You must also work for a qualifying employer for 10 years, submit the appropriate documents each year, and make 120 student loan payments on time.

Once all of this is done, you can submit an application for PSLF and the federal government will write off any outstanding loan balances. Unlike the CLRP, any money you receive under the PSLF does not count towards your taxable income for the year, so it will not increase your tax bill.

Military personnel can qualify for the PSLF, so this is an option to explore if you are not eligible for the CLRP or if you have exhausted the benefits to which you are entitled under the CLRP. But if you are planning on pursuing PSLF, you had better register soon after graduation so your 10 year clock starts right away.

If you are a military, veteran, or student interested in joining the military, you may be eligible for a military student loan forgiveness. Explore all of your options before signing up and make sure you understand all the rules and eligibility requirements for the forgiveness program you are interested in.

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