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A Guide to Military Student Loan Forgiveness

May 28, 2019 · 6 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

A Guide to Military Student Loan Forgiveness

Many people join the military right out of high school knowing that they may benefit from tuition assistance if they pursue higher education afterward. After all, the connection between military service and paying for college goes at least as far back as the GI Bill .

But enlisting is also a career opportunity for people who have just graduated from college or graduate school. About 7% of enlisted personnel serving have a bachelor’s degree, which jumps to more than 80% for active-duty officers.

If you join the military with student debt, you may qualify for many benefits not available to the average person. Some of these allow you to reduce or stop your payments while you’re on active duty, but other advantages continue long after you’ve left the service.

Some of them even result in part of your loan balance being wiped away. With total student debt among Americans reaching $1.5 trillion , you may have considered whether it makes sense to join the military after college to pay off loans.

You may be wondering, does the military pay off student loans? What about student loan forgiveness for veterans? There are lots of programs out there for service members and vets, but navigating them can get confusing. Here’s a guide to making the most of military student loan forgiveness and other benefits.

Delaying Loan Payments While You’re in the Military

The first loan-related benefit to joining the military comes soon after you graduate. All borrowers of certain federal loans—including Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized Federal Stafford Loans, and Unsubsidized Federal Stafford Loans—have a six month grace period after graduation.

During this time, no monthly payments are due, but interest will likely start accumulating. (There is no grace period for PLUS loans.) If you begin active military duty at least 30 days before the grace period ends , you will have a full six-month grace period when you return.

If you have federal loans, you have another option for delaying payments—deferment. Serving in the military in most cases makes you eligible for deferment . When your loans are under that status, you can stop making payments, or reduce the amount you pay, for a defined period.

Depending on the type of loan you have and other factors, you may not be responsible for interest during that time. You’re eligible for deferment if you were on active duty service as part of a war, military operation, national emergency, or for the 13 months afterward. To apply for deferment, submit a Military Service and Post-Active Duty Student Deferment Request to your loan servicer.

A forbearance is similar to a deferment in that it allows you to pause or reduce your federal loan payments temporarily. With forbearance, however, your interest will accrue regardless of what type of loan you have.

If you don’t qualify for a deferment, you may still be eligible for forbearance if you’re in the National Guard and have been activated by a governor, or if you have certain types of loans that qualify for military loan repayment assistance (more on that below). If you have private loans, there’s no guarantee that you can put them off while on active duty—check with your lender if they will allow you to do so.

Does the Military Pay Off Your Student Loans?

Yes, in some cases! If you’re in the military, there are a variety of generous programs out there for getting assistance with paying loans. For starters, there are several army student loan repayment programs.

The Army’s Loan Repayment Program (LRP) is offered to highly qualified applicants entering the Army enlisting active duty soldiers who sign on for a term of at least three years and meet other criteria, such as enlisting in one of the MOSs that qualifies for the program.

If you meet eligibility requirements, this benefit pays off more than 33% of your loan principal, after taxes, or $1,500—whichever is higher—for each year of service. You can qualify for up to three years, and up to $65,000, minus taxes, in all. This program permits Soldiers who have served in combat situations to cancel up to 100 percent of their Federal Perkins Loans, or National Direct Student Loans. This benefit does not apply to Stafford loans or PLUS loans.

Active duty Soldiers in hostile fire or imminent danger pay areas for at least one year are eligible for cancellation of their Federal Perkins Loan Program student loans.

The Navy has a nearly identical program . The Air Force currently doesn’t have a program like this, but it does help with tuition for health professionals on active duty (up to $45,000) and to members of its Judge Advocate General’s Corps (up to $65,000).

If you’re in the Army Reserves , you qualify for a slightly smaller benefit. The Army offers to repay 15% of your outstanding principal, minus taxes, or $1,500—whichever is higher—after each year of service.

The total can’t exceed $20,000, minus taxes. Again, only federal loans qualify. The benefit for someone on active duty in the National Guard on the federal or state level is similar.

There is another Army program aimed specifically at health care professionals serving as officers. As part of the Medical Corps, Dental Corps, or Allied Health Corps, you can get up to $120,000 of your student loans repaid. The loans in question should be for relevant training, including medical, dental, and pharmacy school. Those in the Reserves may qualify for $50,000 in repayment over three years.

Other Loan Forgiveness Programs for Military Personnel

If you served in the military, you may be eligible for Public Service Loan Forgiveness. This program erases the balance on certain types of federal loans if you work in eligible public service roles, including in the military. To qualify, you need to make at least 120 payments (not necessarily in a row) while working full-time in a qualifying position and sign up for an income based repayment plan.

You don’t necessarily have to stay in the military for a full decade to qualify. This program also offers student loan forgiveness for veterans who go on to other types of public service afterward, including in government agencies, many nonprofits, police departments, public health organizations, and more.

You may also qualify for an income-driven repayment plan while on active duty or after you return. The government offers four repayment plans for federal loans that tie your monthly payments to your discretionary income in order to make them affordable.

The specific plan you qualify for depends on the types of loans you have and when you took them out. You will owe between 10% and 20% of your discretionary income, and if you make all payments on time, your balance will be forgiven after 20 or 25 years, depending on the plan. That can go a long way toward making payments manageable.

Other Student Loan Benefits for People in the Military

Under the Servicemembers Civil Relief Act (SCRA), your interest rate for both federal and private loans is capped at 6% while you’re on active duty. This applies to loans that were disbursed before the active-duty service, and there are no fees for the benefit. Some loan servicers automatically apply the benefit if you’re listed in government military databases, but the best way to ensure you receive it is to apply directly.

Another benefit, known as Military No-Interest Accrual (MNIA), applies when you’re on active duty and operating in a hostile area as part of a war, national emergency, or contingency operation.

It allows you not to pay interest on Federal Direct Loans, issued on October 1, 2008, or after, for up to five years. To qualify, you’ll need proof that you were deployed to a hostile area, such as a military order or signed statement.

The Higher Education Relief Opportunities (HEROES) Act gives you a leg up in other ways. It allows the Department of Education to waive or amend some of its requirements regarding your loans while you’re on active duty in the military or National Guard during a war or national emergency.

For example, you don’t need to provide information about your family size and income, usually required annually, to recertify your income based repayment plan. So you don’t have to carry that mental burden when you’re already carrying a heavy load.

If—heaven forbid—you become “totally and permanently disabled ,” as a veteran, you may qualify to have your loans discharged. To apply for a discharge, you need to submit paperwork from the Department of Veterans Affairs confirming that you are 100% disabled because of your service or based on an “individual unemployability rating” from the VA. It may also be a good idea to look into any grants or other scholarships specific to military personnel.

When looking out for benefits, keep your wits about you. There are scams out there. Focus on established programs through the Department of Education or military agencies.

How Refinancing Can Help You Get Your Loans Under Control

If you qualify for the benefits described above, great! But chances are you’ll still need to pay at least a portion of your loans while you’re enlisted and after you resume civilian life. For many people, refinancing student debt can be a way to qualify for lower interest rates or a lower monthly payment, especially with a solid credit and employment history.

Refinancing allows you to take out a new loan, with new terms, and use it to repay your existing loans, whether they’re federal or private.

Keep in mind that while doing so can have many advantages, you’d be giving up some of the federal benefits, such as deferment, Public Service Loan Forgiveness, and income-driven repayment plans, as well as some of the military-specific loan repayment assistance.

However, some benefits, including the interest rate caps, apply to private loans as well, and some private lenders may offer flexibility while you’re on active duty or experiencing economic hardship.

Put Your Mind at Ease about Student Loans

When you join the military, you’re serving your country and sometimes putting your life at risk. That’s why the military and federal government offer special benefits to help with student loan repayment above and beyond those available to people following other career paths.

Are you a member of the military or thinking of enlisting? Look into whether refinancing your student loans with SoFi can make the transition easier.


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