It’s quite ironic that military members put their lives on the line to protect our country only to come home and struggle with student loan debts. It’s not a great experience to be at the front lines and think about student loans. That’s why the student loan forgiveness for veterans is available. However, in August 2019, President Trump approved a memorandum to eliminate tens of thousands of loan debts of veterans who are disabled. Trump signed the presidential memorandum so that disabled veterans will not have huge student debts.
Even though it’s a great idea, not all veterans will have their student loans eliminated. Here’s what you need to know to keep yourself updated on student loan forgiveness for veterans and more.
President Trump’s Student Loan Forgiveness For Veterans
Trump signed the presidential memorandum to ensure that veterans who are seriously wounded will not have substantial student debts on top of their pain. So, he vowed to cancel every single penny, freeing disabled veterans of massive student loan debts. But not all permanently disabled veterans will get their loans canceled.
According to President Trump, over 25,000 veterans who cannot be on active duty due to severe and permanent injuries will have their loans forgiven. The average amount that will get canceled is about $30,000. You will not pay taxes on these forgiven debts.
However, records, according to CNBC, shows that the federal government is still searching for $1 billion repayment in student loan debts. These loans are from over 40,000 heavily injured veterans who cannot work.
At least, 25,000 of the disabled veterans are in default, and only 8,500 applied for student loan forgiveness for veterans. The Department of Education decided to make it simple for disabled veterans to apply for forgiveness. They’ll send them a notification to let the veterans know they are eligible for the debt cancelation.
The process of getting your loans canceled can be difficult and complicated. It’s prevented many disabled veterans from receiving their forgiveness even though they are eligible. It brought significant hardship to these veterans because some of them have brain injuries, while others are paralyzed.
New Update On Trump’s Student Loan Forgiveness For Veterans
You may be aware that disabled veterans have the right to acquire their veteran student loan forgiveness through the permanent disability discharge program. So, what’s the new change?
The details of the plan are currently underway. Trump has left everything to the Department of Education to come up with a system. But, you’ve probably noticed that the current program to help disabled veterans to get relief isn’t working the way it should.
Right now, disabled veterans with their loans forgiven are not over 43%. That means veterans qualified for the program are around 25,000, and others have their loans in default. Now the President has a way to make the process easy for every disabled veteran, but the process is not definite yet.
As it stands, to apply for a veteran student loan forgiveness as a disabled veteran is the same as when a regular citizen applies. If you are facing the same challenges with the application process, remember that you already qualify for the permanent disability discharge program. There is a way to get rid of your loans if you cannot apply for a full-time job.
For you to apply for the TPD, you have to acquire documentation from the Veteran Affairs (VA) Department, a physician, or social security. The documentation is to show that you can’t work a full-time job with your current state of disability.
Should You Utilize The Permanent Disability Discharge?
President Trump’s plan to cancel millions of dollars of disabled veterans loan debt is a great deal. If you qualify for the relief, take the opportunity to apply. But, you shouldn’t wait to get Trump’s discharge when you’re eligible for the TPD program.
If you qualify for the veteran student loan forgiveness, there’s a 60-day window to make a final decision to take it or not. So, should you utilize the TPD program? For most instances, yes. The only reason you should avoid disability discharge is when, in the future, you decide to take student loans. For example, if you want to pursue an education in your permanent disability state, you should avoid TPD to make it easy for you to get a student loan someday.
If you want a student loan, send a letter to your institution. The letter should be from a physician, proving that you’re in a good state to work again. Also, you have to acknowledge in a statement that you’re fully aware of not having a TPD in the future. The total and permanent discharge is a one time offer.
The TPD has a three-year period to repay your loan debt. If you acquire a student loan again within the three-year duration, you’ll have to pay back your previous loan debts. But, that’s if you couldn’t wait for the three years. Taxes were an issue with the TPD. You needed to pay any discharge amount on your TPD. But after January 2018, taxes are no more a concern.
Other Available Student Loan Forgiveness For Veterans
There are different ways to clear off your student loans if, for some reason, you don’t qualify for Trump’s relief. There are available opportunities to pay off your student loan debts when you enlist in the military. Those benefits don’t end when you leave the military service. Here are some of the following ways to reduce or eliminate your student loans as a veteran:
Income-Driven Repayment Plan
First of all, if you’re a veteran and making less monthly payments towards your student loans, you can apply for the IDR plans at the Department of Education. There are four ways to lessen the burden on your monthly payments. They are:
- PAYE Plan
- REPAYE Plan
- ICR Plan
- IBR Plan
Each of them has its requirements, but ultimately, they can help reduce your monthly payments for a specific repayment period.
Servicemembers Civil Relief Act (SCRA)
If you had student loan debts before enlisting in the military, the SCRA could help you limit the interest on your student loans. Your student loan interest reduces to six percent if you’re on active duty. The interest rate is available to both federal, and private student loan borrowers, but only federal student loans after or in August 2008, are eligible.
Also, if you had your federal loans consolidated before starting your active service, there’s a chance you will not qualify for the SCRA.
Deferment On Student Loans
There is an option for you to defer your student loans as a military veteran. You can postpone your private or federal loan repayment plans while on active duty. As a veteran, you must have served in a war to qualify for the deferment. If you were assigned to a different station, you could be eligible for the deferment.
Also, you need to acquire a written statement from your personal or commanding officer before you can be eligible for the deferment.
President Trump’s student loan forgiveness for veterans may be the easiest way to get rid of your loans without any difficulties. You should take every opportunity to get involved in the relief and have your debts forgiven. But if for any reason, you don’t qualify, there are other ways to pay off your student loans even as a veteran. You need to find any possible ways to clear your debt before your student loans grow out of control. If you need assistance, you can contact your financial experts to layout credible options to help you get out of student loans faster.