The GI Bill is one of the most popular military benefits programs around and it is a great way to pay for your college education. But the GI Bill can only be used to pay for college while you are in the service or after you separate from the service. What if you already had student loans when you joined the military? Well, there are military sponsored student loan forgiveness and repayment programs for that too.
Note: President Joe Biden Biden announced a three-part student debt relief plan on Aug. 24, 2022 that includes up to $20,000 in loan forgiveness. The plan also extended the student loan repayment pause to Dec. 31, 2022.
Sign up for more student loan forgiveness information, updates and notifications from the Department of Education here.
Student Loan Forgiveness for Military Members
The military has several student loan forgiveness programs available to servicemembers, depending on their branch of service, enlistment of commission status, career field, and other variables. Not all of these are applicable to everyone, but we want to provide a general resource for prospective, current, and former military members.
Reserve Officer Training Corps (ROTC)
Reserve Officer Training Corps (ROTC) is probably the most well-known option for having the military pay for college. Students apply for and are accepted into ROTC and receive a college education in exchange for a military service commitment. Details vary by branch and school and I recommend prospective students research these programs with the school they are interested in attending.
Armed Forces Student Loan Repayment Programs
The military wants to attract an educated force, and one way to do that is to target college students by offering them a student loan repayment program in exchange for military service. Currently only the Army and Navy offer SLRPs.
Army Loan Repayment Program (LRP). The Army LRP is available to highly qualified new Army recruits in certain critical career fields (contact your recruiter for a current list of eligible career fields). To be eligible, recipients must be a non-prior service member, decline the Montgomery GI Bill in writing when they accept the Army LRP, and they must have the LRP written into their enlistment contract. Soldiers enrolled in the Army Loan Repayment Program will earn 33 ⅓ percent or $1,500, whichever is greater, toward the remaining original unpaid principal on all qualifying loans for each successfully completed year of enlisted active duty up to $65,000. More information.
Navy Loan Repayment Program (LRP). – The Navy also offers a Loan Repayment Program for eligible first term Active Duty enlistees. Eligible servicemembers must have no prior military service and eligible student loans. This must be entered into the enlistment contract when joining the service. the Navy will repay 1/3rd of the approved LRP incentive amount or $1,500 (whichever is greater) on the sailor’s 1st, 2nd, and 3rd anniversary of their active duty service date. The total amount paid will be based on the amount approved during the application process minus applicable federal and state taxes.
Student Loan Repayment for Medical, Law, and other Professionals
The military often has a difficult time attracting certain professionals into the military ranks, especially in professions which are generally high paying jobs in the civilian sector. In these instances, the military may offer student loan repayment programs in exchange for a military service commitment. The most common careers which are eligible for these professional programs include doctors and lawyers, with forgiveness amounts ranging from $40,000 – $65,000. However, there can be other eligible career fields depending on the branch and the needs of the military. These are programs you want to investigate before joining the military as these are used as recruitment tools. Listing each of these opportunities is outside the scope of this article, so I encourage you to visit the respective branch website, or contact a military recruiter for more information.
Servicemembers Civil Relief Act
The Servicemembers Civil Relief Act gives military members the opportunity to reduce the interest rates on loans which they took out prior to joining the military. This law requires lenders to reduce the interest rate on loans to a maximum of 6% interest, provided the military member qualifies. This includes loans such as a mortgage, credit cards, auto loans, and private student loans. However, the Servicemembers Civil Relief Act does not lower interest rates on federal guaranteed student loans.
Servicemembers should contact their lender for more information on how to apply the Servicemembers Civil Relief Act to their current loans. Be sure to get everything in writing when doing this – it is not the most well-known law in the books and some lenders may not be familiar with the process.
Student Loan Deferments
Some military members may be eligible for student loan deferments, depending on their status, lender requirements, and other variables. Keep in mind that a deferment is not the same as a cancellation of debt, just a way to temporarily postpone repaying the loan. Military members should contact their lender to explore student loan deferment options when they join the service or when they deploy. Some lenders will offer student loan deferments out of their individual policies, while other lenders will not.
Servicemembers who are attending qualified college classes should also explore the opportunity of deferring their student loans. For example, students who are attending college with Tuition Assistance may be eligible to defer their student loan payments while they are attending classes.
Your professional military education may also make you eligible to defer your student loans. For example, members of the USAF are automatically enrolled in the Community College of the Air Force (CCAF) when they go through their job-specific technical training. The CCAF is an accredited educational institution, and attending the CCAF may make student loan holders eligible for deferred loans.
A note about student loan deferments: This would only help delay the student loan payments, not get rid of them. It would be a good idea to use the deferral to your advantage by either repaying other non-student loans, or making pre-payments on your current student loans. Don’t use it as an excuse to get further into debt.
Student Loan Refinance
Refinancing your student loans could save you thousands or lower your monthly payment for loans that are not eligible for military repayment programs. By refinancing, you can save money by replacing existing education debt with a new, lower-cost loan through a private lender, such as SoFi or Earnest.
For most private student loan lenders, you’ll need a credit score that is at least 650 or higher, a steady income, and you must have graduated with an associate degree or higher.
To decide if refinancing your student loans makes sense, you’ll want to make sure your loans qualify, that you’re not giving up payment options you might need, that you’re getting a better interest rate, and that you’ve chosen the right company.
Consider shopping multiple student loan refinance lenders to get the best rate and terms.