Military Student Loan Forgiveness

It seems like a failure of policy and priorities to not forgive the student loan debt of our nation’s veterans and service members.

Until that happens, service members must rely on one of a few options to reduce or excuse student loan debt. Most come through federal programs, though none apply to all, and most are not simple.

That being said, any forgiveness helps, so it’s wise for those who have served or are serving to know what’s available.

Options for Military Loan Forgiveness

Among the better options for military members to reduce or dismiss student debt are the Public Service Loan Forgiveness Program and the National Defense Student Loan Discharge

The Military College Loan Repayment Program (CLRP) can help active and past members, as well as those in the reserves.

All provide some debt help for military members, current or past.

Public Service Loan Forgiveness Program

This program applies to anyone who works in public service, which includes the military. The idea behind the program was to provide an incentive to young men and women to consider certain types of public service work. In exchange for 10 years of work and payments on loans, the government will forgive the balance.

The program cancels remaining debt after 10 years of public service and after 120 monthly student loan payments – 10 years – have been made on time and consecutively. Those who take part must have a full-time job.

The biggest negative is that after 10 years some borrowers would have paid a significant portion of their loan.

The program covers Stafford/Ford Loans (subsidized and unsubsidized), PLUS Loans and Federal Direct Consolidation Loans. If you do not have those kinds of Direct loans, you may consolidate them into a Direct Consolidation Loan that does qualify.

The website studentaid.gov has a self-help tool that helps explain the loans to see if you qualify.

National Defense Student Loan Discharge

The National Defense Student Loan Discharge (NDSLD) program is geared to help military personnel who took out a Perkins Loan or a National Direct Student Loan and who served for one year in the military in an area with imminent danger and/or direct fire.

Basically if your life was at risk and you have the right loan, you qualify.

The program cancels 100% of the loan if military service began on or after Aug. 14, 2008. Those whose service ended before that date can have up to 50% canceled.

If you think you qualify, you must fill out a DD 214 discharge form and explain why you think you qualify. A commanding officer must certify the service member’s service dates. The form and the explanation must be sent to the company that services the loan.

A full year of active service means up to the entire loan could be canceled. Less than a year of active-duty service does not qualify. A complete and full year is 12 consecutive months.

Because the policy applies to Perkins Loans, it may not be of great use today. Perkins Loans ended on Sept. 30, 2017, but those with older loans who qualify could consider this option.

CLRP for Reserve Servicemembers

The military College Loan Repayment Program (CLRP) is a special incentive to join the service. In the CLRP, the military will repay a portion of qualifying student loans.

CLRP sends money owed directly to the company that services the loan, which ensures the loan is being paid. The first payment is typically made at the end of the first year of service.

To qualify, you must:

• Have a college degree
• Have a score above 50 for the Armed Forces Qualification Test
• Have a student loan accepted in the program. Common loans that qualify include Stafford, Perkins, PLUS Loans and Consolidated Loan Program loans.
• Have enlisted for at least three years (six years in the Army and National Guard).
• Have a student loan that is not in default and that was taken out prior to enlistment.

Payments do not cover loan interest, only principal, and there are limits on the amounts sent each year, which we explain below.

Who Is Eligible for Military Student Loan Forgiveness?

Eligibility for military student loan forgiveness depends on the program. The Public Service Loan Forgiveness Program applies to those in public service who have made 10 years of student loan payments. The NDSLD program applies to those who served in an area of danger and/or with live fire for one year. The CLRP applies to those with a college degree who enlist for at least three years.

Free help and advice are available to all military members. It could come in the form of a nonprofit credit counselor who can assess income, finances, and debt, and provide solutions. Or it could come within the military itself. The Office of Servicemember Affairs (OSA) helps military families with financial issues. It also works with other agencies to address problems faced by service members.

The program is run through the Consumer Finance Protection Bureau, which offers a PDF on Public Service Loan Forgiveness.

How Much Student Loan Forgiveness is Offered by the Military

Most of the forgiveness or loan repayment comes through the College Loan Repayment Program. The amount repaid in the CLRP depends on the branch of the service. The Army and Navy CLRP pays up to $65,000 per service member. The National Guard CLRP offers $50,000, the Coast Guard $30,000, the Air Force $10,000. The Marines do not offer CLRP, so if you are going into the service to seek help with student loan debt, the Marines are not the best option.

Payments are made starting at the end of the first year for one-third of the remaining loan principal, or $1,500, whichever is greater. Benefits cap out at the amounts listed above for each service.

Various other programs offer different amounts. All are tailored to specific careers, and jobs/duties:

• The Army has a program for doctors, dentists, and other health care professionals on active duty or in the Reserve that helps borrowers get up to $120,000 of their student loan repaid.
• Those in the Air Force Financial Assistance program for medical and dental residencies may receive $45,000 for every year in the program. When you complete your residency, you will have a one-year obligation to the service for each year of participation, plus one extra year.
• Members of the Army Reserve with prior military service may receive up to $50,000 for student loan repayment through the Prior Service Soldier Loan Repayment Program.
• The Air Force Judge Advocate General’s Corps Loan Repayment Program pays up to $65,000 in loan repayment. Payments are made to lenders for three years, but only after you have completed the first year as a JAG officer.

Finally, those who return from service with total and permanent disability qualify for discharge of federal student loans. Starting in 2021, those whose disability matches their Social Security data automatically had federal student loans discharged.

Student Loan Benefits for Members of the Military

Members of the military can find student loan relief in various programs. Among them:

• The Servicemembers Civil Relief Act caps interest rates on student loans obtained prior to the start of service at 6% during periods of active duty.
• Military Service Deferment postpones repayment during active duty for wars, military operations, or national emergencies. Help is also eligible to those assigned to a duty station other than their normal station.
• Deferments After Active Duty allows veterans to postpone repayment while they prepare to go back to school after their active duty.
• Under a 0% Interest plan, service members do not have to pay interest for up to 60 months while serving in a hostile area that qualifies for special pay.
• Income-Driven Repayment Plans calculate your monthly payment based on your income. These plans may even qualify for a low or zero payment with the possibility of loan forgiveness in 20-25 years.

How Do You Apply for Military Student Loan Forgiveness

For Public Service Loan Forgiveness, search online to see if your employer qualifies. Then fill out the required form annually to certify your military service. The PSLF form to apply comes from studentaid.gov, along with the self-help tool. You could apply for forgiveness after 10 years of service and after 10 years of faithfully paying a loan.

To apply for NDSLD, candidates must fill out a special DD 214 form with an explanation why you qualify, then send it to the company that services the student loan.

To apply for CLRP at the military branches that offer it, DD form 2475 must be filled out. Members must be in good standing with the service, and in good standing with their loans.

Additional Education Benefits for Military and Veterans

Several programs are available to help service members and veterans start or continue their education. During service, servicemembers can access up to $4,500 per year in military tuition assistance, paid on a per class basis.

The G.I. Bill is the main way the government provides the military help with education after a member’s service ends. It provides up to 36 months (four school years) of education benefits to eligible members and veterans for college, technical schools, apprenticeships/job training, flight training and licensing and testing programs.