By Shalena Gonzales
Financial Aid Specialist, American Public University
If you have federal student loans (Stafford, PLUS, and consolidation) and are serving (or have served) on active duty or performing qualified National Guard duty during a war, military operation, or national emergency you may be eligible for special options. There are special benefits and repayment options for student loans available from the U.S. Department of Education and the U.S. Department of Defense. Service members struggling with student loan debt can find relief through federal programs that cap interest rates and offer loan forgiveness.
Here is a list of benefits available to service members:
Servicemembers Civil Relief Act (SCRA) Interest Rate Cap
Interest on federal student loans obtained prior to your military service is limited to 6% during periods of active duty. The interest rate limitation also applies to any private education loans you may have.
Military Service Deferment
You can postpone federal student loan repayment during certain periods of active duty, such as during war, other military operation, or national emergency, and immediately following active duty.
Public Service Loan Forgiveness
You may qualify for forgiveness of the remaining balance of your Direct Loans when you’ve made 120 qualifying payments after October 1, 2007, while employed in public service, including military service.
Deferments After Active Duty
You can postpone repayment while you prepare to return to school following your active duty.
While you are serving in a hostile area that qualifies you for special pay, you do not have to pay interest on Direct Loans made on or after October 1, 2008, for up to 60 months.
Repayment Based on Income
Repayment plans that base your monthly payment on your income are available. Under these plans, you may qualify for a low or zero payment amount with the possibility of forgiveness of the remaining balance in the future.
HEROES Act Waiver
While you are on active duty, the Department of Education waives many of the documentation requirements attached to program benefits. For example, if you are on a payment plan based on your income and military service prevents you from providing updated information on your family size and income, you can request to have your monthly payment amount maintained.
Department of Defense (DOD) Repayment of Your Loans
In certain circumstances, as determined by the DOD, all or a portion of your loans may be repaid by the DOD.
Veterans Total and Permanent Disability Discharge
If you have a service-connected disability, you may qualify for discharge of your federal student loans.
List provided by Department of Education, Federal Student Aid
Individual branches of the military have their own student loan repayment programs, too, notes financial aid expert Mark Kantrowitz, publisher of Edvisors.com (Sheehy, 2013). The Army, for example, pays up to $65,000 in qualified loans (Sheehy, 2013). Graduates need to request the benefit when they enlist and must turn down the GI Bill (Sheehy, 2013). Military repayment assistance only applies to federal loans, which can be a point of confusion for some service members (Sheehy, 2013). Please be sure to contact your student loan servicers for additional information on these options, including eligibility information and what documentation you should provide to receive the benefit.
Sheehy, K. (2013, November). Student Loan Relief Available Through Federal Programs For Service Members. Retrieved from Huffington Post: http://www.huffingtonpost.com/2013/11/11/student-loan-relief-service-members_n_4254872.html
U.S. Department of Education (2013, February). For Members of the U.S. Armed Forces. Retrieved from Federal Student Aid: http://studentaid.ed.gov/sites/default/files/military-student-loan-benefits.pdf