Student Loan Forgiveness for Military Personnel
In 2017, there are still millions of dollars available via military student loan forgiveness benefits programs, including some programs that make getting your college degree virtually free. But better yet, these benefits are some of the only programs in existence that will pay down your student loans after you’ve already accumulated them.
The excellent Military College Loan Repayment Programs satisfy the need of military service members who enter the military (or renew service contracts) with existing student loan debt, helping them to get rid of their loans and offering a set amount of money for each year of the service contract that you complete.
How powerful are these benefits? Simply put, the Military College Loan Repayment Program remains the absolute best Federal Student Loan Forgiveness Program in existence.
In fact, CLRP benefits are even better than those offered by the outstanding Public Service Loan Forgiveness Program, or any of the recent Private Student Loan Forgiveness Programs created to offer Closed School Loan Discharges (for ITT Tech, DeVry and Corinthian Colleges), and they’re better than the program just set up to offer relief to borrowers scammed by Navient as well.
In fact, I still think that the single best way to get out of student loan debt is to join the military, and while I wouldn’t recommend that anyone enlist solely for that reason, I do think it’s worthy of consideration.
Why? Because the Military’s College Loan Repayment Programs can get you out of up to $65,000 in student loan debt, in return for just a few years of military service. And that’s a pretty powerful incentive to enlist, especially during a time when there appear to be no major wars on the horizon.
But Before I Explain How It All Works…
If you’re deep in student loan debt then you’re doing the right thing by researching these benefits. And while you can certainly take care of the debt entirely on your own, my advice is to have a quick consultation with one of the paid services that’ll do all the work for you, for a small fee.
My favorite student loan assistance company is called the Student Loan Relief Helpline, who is staffed by actual experts in the space; people who know how to help you get rid of your student loan debt as quickly as possible.
If you’re considering enlisting simply to get rid of your student loans, call these guys first, because you’re probably about to make a huge mistake. Call the Student Loan Relief Helpline, tell them the details of your situation, and find out what they suggest you do to deal with your loans. It’s possible that you may be able to qualify for forgiveness benefits, a bankruptcy discharge, or even a Borrowers Defense Against Repayment Discharge (which lets you wipe out your debt instantly).
Your call and initial consultation are entirely free, so you’ve got nothing to lose by calling. Even if you choose NOT to pay for their help, they may be able to at least point you in the right direction for what you should try next.
To reach the Student Loan Relief Helpline, call 1-888-906-3065.
Loan Forgiveness Programs for Military Personnel
Here are the most important student loan debt programs that you can take advantage of as a member of the military:
- The Military College Loan Repayment Program (CLRP)
- The Public Service Loan Forgiveness Program (PSLF)
- The National Defense Student Loan Discharge (NDSLD)
- The Servicemembers Civil Relief Act (SCRA)
- Federal Student Loan Deferment Programs
The rest of this page goes into each program in detail, explaining what it is, what it offers, and how to take advantage of the benefits.
For specific details on each individual program, make sure to click through the links to other pages of my site, where I’ll go through the benefits in even greater depth.
If you have any questions about any of these benefits, please feel free to ask in the Comments section below. I will do my best to get you a response within 24 hours.
1. The Military College Loan Repayment Programs
Military College Loan Repayment Program benefits are only available if you’ve already accumulated student loan debt and are considering joining the military in an active duty role, or if you’ve previously served in an active duty role and are now considering joining the reserves.
CLRP benefits are available from each branch of the military, including the Army, Navy, Air Force, National Guard, Coast Guard and some branches of the Reserves.
In order to qualify for the military loan repayment program benefits, you’ll have to meet the following eligibility criteria.
- Be enlisting in the military for the first time (or joining the reserves after completing an active duty enlistment)
- Be enlisting in an MOS that is eligible for participation in CLRP (only those positions with shortages are eligible for CLRP benefits)
- Hold a high school diploma (GEDs and equivalency tests do not qualify you for participation in this program)
- Score at least a 50 on the Armed Forces Qualification Test
- Request CLRP participation in writing on your enlistment contract
- Decline participation in the Post 9/11 GI Bill (if you’re only enlisting for 4 years, if you’re enlisting for 6, then you can take CLRP benefits AND Post 9/11 GI Bill benefits)
- Have a student loan that meets CLRP program eligibility guidelines
What student loans qualify for Military College Loan Repayment Program benefits?
Only loans that are not in default, and which also meet the following criteria:
- Loans that are made, insured or guaranteed under the Federal Family Education Loan Program
- Loans that are made under the William D. Ford Federal Direct Loan Program
- Loans that are made under the Federal Perkins Loans program
- Loans that are incurred for educational purposes and:
- Made by a lender that is an agency or instrumentality of a State
- Made by a financial or credit institution, or an insurance company subject to examination and supervision by an agency of the U.S. or a State
- Made by a pension fund or non-profit private entity
How Much Money Does CLRP Provide?
The amount of money you are entitled to varies depending on which branch of the military you join, but the maximum amount of military college loan debt forgiveness you can receive in your life is $65,000.
This number has not changed in the 5 years that I’ve been tracking these benefits, so I don’t anticipate that it’ll change any time soon (unless President Trump’s Student Loan Reform Plan is a way bigger game-changer than anyone’s anticipating).
Anyway – the amount of money you’ll receive from CLRP is also partially determined by your duty-status, with active duty members eligible to receive up to twice as much as those personnel who join the reserves.
Here’s the breakdown by status:
- Active duty enlistees are entitled to receive up to 33.33% (or $1,500, whichever is greater) of their loans outstanding principle balance paid for each year of service that they complete.
- Enlistees in the reserves are entitled to receive up to 15% (or $1,500, whichever is greater) of their loans outstanding principle balance paid for each year of service that they complete.
How Does CLRP From Each Branch Work?
CLRP benefits are available from all branches of the military, but each of them have different requirements, different lifetime maximums, and different ways of disbursing the benefit.
Find out how it works with each service branch below:
The Army College Loan Repayment Program
Out of all the service branches, the Army’s CLRP benefits package is typically regarded as the best, since it provides up to $65,000 in lifetime student loan forgiveness.
The benefit is doled out on an annual basis, beginning as soon as a Soldier completes his first year of qualifying service, and provided at a rate of either 33.33% of his or her loan’s outstanding principle balance, or $1,500, whichever amount is greater.
For details, please visit my page on Army SLRP benefits.
The Army Reserves College Loan Repayment Program
Members of the Army Reserves are eligible to receive some loan forgiveness benefits as well, though it’s not quite as valuable as what the regular Army Soldiers get (which makes sense).
After their first year of service, Army Reserves personnel will receive annual forgiveness of up to 15% of their outstanding principal balance, or $1,500 (again whichever amount is greater).
The Navy College Loan Repayment Program
Sailors have access to about the same benefits as Soldiers, with up to $65,000 in lifetime loan forgiveness available to those who qualify for the benefit.
Like Soldiers, they’re only eligible to begin receiving CLRP benefits after they’ve completed at least a year of service, and they can’t qualify for the program unless they agree to sign up for at least four years of service.
For details, please visit my page on Navy CLRP benefits.
The Navy Reserves College Loan Repayment Program
Reserves Sailors don’t have access to quite as much benefit as their Active-Duty counterparts, with a lifetime max of only $10,000 of total loan forgiveness.
They’re only able to begin receiving repayment benefits after completing their first year of service, but unlike the Active-Duty Sailors, they’ve got to sign up for a longer service contract as well, agreeing to serve for at least 6 years.
The Air Force College Loan Repayment Program
Airmen get short-changed in terms of what’s available to them, with only $10,000 in lifetime loan forgiveness benefits on offer, and about the same eligibility rules applied to Soldiers and Sailors.
If you’re main reason for joining the military is to secure some financial assistance for your student loan debt, then you’d do best to look to one of the other branches, because you’re not going to get much help here.
For details, please visit my page on Air Force CLRP benefits.
The National Guard College Loan Repayment Program
Let’s not forget the Guardsmen, who’ve been especially busy in recent years with the wars in Iraq and Afghanistan, and who were finally made eligible to receive some serious financial assistance back in 2014.
Both Officers and enlisted personnel are eligible to receive up to $50,000 in student loan forgiveness benefits, but the eligibility criteria for qualifying to receive these benefits is pretty complicated.
For details, please visit my page on National Guard CLRP benefits.
The Marines College Loan Repayment Program
Speaking of being short-changed, things are even worse for the Marines, where no student loan debt forgiveness has been made available since 2011.
In a certain way, it does make sense that they wouldn’t offer the benefit, since the Marines have the lowest rate of enlistment by college graduates, but still… it doesn’t seem very fair.
The Coast Guard College Loan Repayment Program
On the other side of coin would be the Coast Guard, who do receive a substantial percentage of enlistees from amongst the population of college graduates, and who offer up to $30,000 in loan forgiveness to new personnel.
Like the Army, Navy and Air Force loan forgiveness programs, benefits are first made available after completion of a year of service, but unlike them, the limitations include a stipulation that only $10,000 can be received each year.
CLRP & Interest
Above, I mentioned that you will receive payment based on the “outstanding principle balance” of your student loans, which unfortunately means that interest is not covered by CLRP benefits.
And that means that any interest that has accumulated on your student loan debt will remain entirely your responsibility, which is a bit of a bad deal.
But remember, you could still save up to $65,000 in total benefits by getting access to the Military Student Loan Forgiveness Program, so it’s not that big of a problem, and certainly not one that should lead to you giving up on pursuing these benefits.
CLRP & Taxable Income
A second drawback to CLRP benefits is that the amount of benefit you receive counts toward your annual taxable income, which must be reported to the IRS each year, and which means that you have to pay taxes on whatever amount you receive.
That could be a substantial sum, especially if you’re getting $10,000+ in benefits each year, so you’ll need to plan ahead to deal with the tax liabilities incurred as a result of your participation in the military student loan forgiveness program.
And fortunately, the way military loan forgiveness works is that your benefits aren’t given to you in cash, or a check, as the loan repayments are made directly from the Federal Government to your lender. That may seem like a drawback, but the good part is that the Government will hold back 28% of its payments to be provided to the IRS, covering your tax liability.
Why is that a good thing? Because we all know how hard it is to come up with a huge lump sum of taxes at the end of the year, and since the Government holds back the 28% of their payments for you, your tax liability will already have been covered, meaning that even though you’re being taxed on the benefit, you don’t actually have to come up with any of the cash.
This minor detail bums some military personnel out, because it means that you won’t receive credit for quite as much as you had hoped (you won’t get the entire $65,000 in payoffs, since 28% of that $65,000 goes towards taxes), but again, you’ll still receive a significant amount of money, and you won’t have to deal with any of the tax issues that come from receiving a huge benefit.
CLRP & The Post 9/11 GI Bill
In the eligibility guidelines above, I mentioned that CLRP benefits are only available if you’ve waived your right to Post 9/11 GI Bill benefits, but I want to remind you that this only applies if you sign up for the 4 year service contract.
If you instead choose to sign up for 6 year contract, then you’ll be eligible for both CLRP (for your first three years of service) and Post 9/11 GI Bill benefits (for your second three years of service).
If you ever plan on attending college courses again (literally ever), then I think you want to enlist for 6 years, as the benefit of being allowed to double dip on both CLRP and the Post 9/11 GI Bill is definitely worth an additional two years of service.
Unfortunately, many service personnel don’t become aware of this kink in the rules until it’s too late. If you’re thinking about joining, again, please consider the 6 year service contract, because it’ll be well worth the additional financial incentive.
2. Public Service Loan Forgiveness Programs
The Public Service Loan Forgiveness Program is one of several debt forgiveness programs overhauled by updates to President Obama’s Student Loan Forgiveness Program.
PSLF is the best form of student loan forgiveness for people NOT in the military, but it can also be taken advantage of by military personnel, which is an amazing triple-dipping option (CLRP, Post 9/11 GI Bill benefits and PSLF) that is probably the best possible way to get rid of student loans.
PSLF allows you to have the entire remaining balance of your student loan debt forgiven after making just 10 years worth of payments on the loan.
To qualify for the PSLF program, you’ll have to have worked for at least 10 years in a full-time position, meaning at least 30 hours per week, and you’ll have to have made 120 monthly payments on your student loan debt (120 months equals 10 years).
Those 120 monthly payments also have to have been made in full and on time, and under one of the Income-Based Repayment Plans, so you’ll need to be enrolled in one either the Pay As You Earn Repayment Plan (PAYE), the REPAYE Student Loan Repayment Plan (REPAYE), the Income-Based Repayment Plan (IBR), or the Income-Contingent Repayment Plan (ICR).
Any payments made before October 1st, 2007 won’t count toward your 120 payment minimum either, so the soonest that you can qualify for this program will is October 1st, 2017 (which, might I add, was a long ways off when I originally wrote this post!).
You’ll have to do some research to find out if this program will actually benefit you, because many federally-funded student loans end up being totally repaid by the time they’ve been in active repayment for 10 years.
However, if you’re interested in going through the specific details of the PSLF program, check out my page covering the Public Service Loan Forgiveness Program here.
3. The National Defense Student Loan Discharge
If you used a National Defense Student Loan to help pay for the costs of your college education, then you may be able to have those costs partially discharged by taking advantage of this unique program.
Recipients of National Direct Student Loans and Perkins Loans are eligible to receive partial cancellation of their loans (debt forgiveness), for serving in the Armed Forces if (and only if) their military service included at least one full year in a hostile fire or imminent danger pay area.
If you think you might qualify for a National Defense Student Loan Discharge, all you have to do is send a copy of your DD214 discharge form and a letter explaining why you believe you qualify for this program to the company who services your loan.
While success rates for this program haven’t been widely reported, there are definitely some indications that it’s worked for certain individuals, and it is certainly worth pursuing if you meet the stated eligibility requirements.
4. The Servicemembers Civil Relief Act
The Servicemembers Civil Relief Act (SCRA) was passed by President Bush in 2003, and is essentially an addendum to the Soldiers and Sailors Civil Relief Act (SSCRA) originally created in 1940.
These two laws help clarify and define benefits provided to active duty members of the military.
The law provides a variety of benefits, but the most relevant benefit to loan forgiveness is the following tenet:
- A 6% maximum cap on interest rates for any debt obligations that existed before enlisting in the military
How could you use the SCRA benefit to your advantage? If you have student loan debt (or any other debt for that matter) which is being charged an interest rate higher than 6%, and this debt was created before you joined the service, then you may be entitled to have that interest rate reduced (sometimes dramatically).
While this certainly works for student loan debt, it also applies to credit card debt, mortgages, car loans, or other debt that you may have accumulated prior to enlisting in the military.
Unlike interest deferments, the SCRA interest rate reduction actually forgives debt, it doesn’t just delay your payments til a later date.
While you can’t apply this benefit to any debt you accumulated after joining the military, it is a major bonus to those of you who have pre-service debt which is being charged anything over 6% interest.
To receive this benefit, you’ll need to contact whoever is servicing your loan, in writing, provide them with a copy of your orders, and an official request to have your interest rate reduced according to SCRA law.
You’ll only receive a reduced interest rate for as long as you continue to serve in the military, so don’t delay this request another day. You could stand to save tens of thousands of dollars by acting quickly.
5. Student Loan Deferment Programs
While deferments don’t actually reduce your debt obligations, they can be helpful in delaying them to a later date.
Not everyone in the military is eligible for having their student loan debt deferred, but many service members are. Eligibility rules are determined by status, lender requirements and other conditions.
If a deferment would help you, then consider contacting your lender to find out if they offer student loan deferments for military personnel.
Some lenders provide this benefit to service personnel at the time they join the military, while others offer it only during deployments, but you won’t know what you’re eligible for (if anything) until you speak to the company who services your loan.
Many military students utilizing tuition assistance programs are eligible to defer their student loan payments while they’re actively enrolled in classes, and some service personnel with specific military education are also eligible for student loan deferments.
As an example, Airmen who take classes in the Community College of the Air Force (CCAF) while completing job specific technical training are almost virtually guaranteed to be eligible for loan deferments.
But Is It Enough?
Do these debt forgiveness programs for military personnel offer enough to help prevent our country’s service personnel from being crushed by student loan debt, or are they just the first small step in the right direction?
Have you used any of these programs, and do you have input that you can share with others?
Get More Information
To find out more about how military benefits can save you tens of thousands of dollars in education-related expenses, please visit my Guide to Military Education Benefits.
The only way that the Military Student Loan Forgiveness Programs will continue to be offered is if more people find out that they exist, and sign up for them!
Do your part to ensure that we don’t lose access to this important benefit by spreading the word and posting a link to this page on your Facebook, Twitter, or Google+ account.
Thank you for your support, and please come back soon!
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