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How Military Student Loan Forgiveness Works [2021 Guide]

military student loan forgiveness

Student loan debt has long been a pervasive problem in the United States, and that includes our men and women in uniforms. However, the encouraging news is that military personnel and veterans can opt for military student loan forgiveness programs. Through that, they can get rid of their student loans quickly. 

Joe Biden has talked about canceling some amount of federal student loans up to $10,000. Even some Democrats want him to do more

But a president using his pen to forgive student loan debts is still debatable. And even though Biden may likely make that possible when he becomes president, your financial future lies in your hands. It’s best to look for guaranteed ways to reduce or cancel your student loans, such as military student loan forgiveness. 

This guide will go through the various military student loan forgiveness and repayment programs available to you. Keep in mind that the forgiveness programs outlined in this guide are strictly for federal student loans. Private banks issue private student loans, and the federal authority has no power to forgive such debts. 

Military College Loan Repayment Program (CLRP) 

Let’s say you’ve already piled up massive student loan debts and also considered joining the active-duty military. In such a case, the CLRP is an option available to you. If you’re a military member coming out of active duty and entering the reserves, you can qualify for the CLRP. 

The following are the additional acceptability requirements for the CLRP: 

  • You have to be in the Military Occupational Specialty (MOS) that qualifies for the CLRP. 
  • You need a high school diploma, not an equivalency test or GED. 
  • Your student loan needs to be FFEL loans, federal Direct Loan, or Perkins Loans. But the Perkins Loans should not be in default. 
  • With the Armed Forces Qualification Test (AFQT), you need to get a minimum of 50.
  • When writing your enlistment contract, you must request CLRP participation. 

The amount of money you get for your military student loan forgiveness depends on two things:

  • The branch of the military you enroll in
  • Whether you’re in the reserves or active duty 

Below, you’ll get a summary of how the CLRP works in all the military branches. 

Army 

If you enroll as active-duty Army personnel, you can qualify for a maximum of $65,000 in student loan forgiveness. But you must accept to be in the service for at least three years before you become eligible. 

When you go through the first year, you’ll get 33.33% on your outstanding or remaining principal loan balance. In other words, you’ll receive $1,500 from the Army. But here’s the thing about the CLRP. You don’t get the total amount at once. 

The Army will pay a third of your outstanding loan debt every year. Remember that it doesn’t mean one-third (⅓) for the first year, and one-third of your original amount for the second year, and so on. It means the amount of money you receive for forgiveness decreases each year. And that’s because it’s one-third of the remaining balance due. 

Army Reserves 

When you join the Army Reserves, you’ll get a maximum of $20,000 in student loan repayment assistance. You must enroll in the service for a minimum of six years. After your first year, the Army will forgive 15% of your remaining student loan balance (that’s $1,5000) every year. 

The process will go on while you’re an Army Reserve or until you get to the $20,000 limit. 

One significant flaw in the Army CLRP is that it doesn’t cover the interest you accrued on your student loan debt. The program only provides forgiveness for the principal balance of your student loan. 

However, other student loans don’t attract interest when you enlist in an active duty service. Some even provide deferment options. So you have to speak to your loan servicer to know if you can defer or have your interest forgiven. 

Navy 

The eligibility benefits for the Navy are the same as the Army members. However, when you enroll, you have to accept serving for a minimum of four years. 

Navy Reserves 

The Navy Reserves CLRP program shares similarities with Army Reserve benefits. The only difference is that the maximum you can get for Navy Reserves is $10,000, instead of $20,000. 

Air Force 

As an Air Force military personnel, you can qualify for student loan forgiveness of up to $10,000. That is if you agree to join the service for at least three years. At the end of the first year of your service, you’ll get 33.33% (that’s $1,500). 

After that, you’ll receive a payment every year until you pay off your debt or reach the $10,000 limit. If your student loan is below $10,000, it may be a good idea to join the Air Force. However, it’s not advisable to join the Air Force if your main intention is to see financial help. There’s no much help there. It would be best if you join other military branches. 

Note: The Air Force Reserves do not offer military student loan forgiveness. 

National Guard 

When you join the National Guard, you can end up receiving a maximum of $50,000 in military student loan forgiveness. But you have to serve for a minimum of six years. The eligibility requirements for the National Guard is stricter than other military branches. And it’s different for prior-service personnel, including current National Guard members and non-prior military members.  

Marines

Unfortunately, there’s no military student loan forgiveness for Marines. If you want to enlist in the Marines mainly because of CLRP, you may have to join other military services. 

Coast Guard 

You can get a student loan repayment of up to $30,000 when you join the Coast Guard. You’ll be eligible for $10,000 when you complete your first year in the service. From the second year onwards, you’ll continue to receive benefits until you reach your sixth year of service. That is if you don’t get the limit of $30,000 first. 

CLRP Doesn’t Cover Loan Interest 

Keep in mind that the CLRP only covers your principal loan balance. That means you won’t get any money for your student loan interest, so you’ll have to pay the interest rate yourself. However, you can still save money in the long run. That’s because as your principal decreases, your speed at which your overall balance grows also decreases. 

The money you acquire via CLRP is subject to tax. That means it could increase your income tax liability during the years through which you got your loan forgiveness. The federal government automatically retains 28% of its payment to you. So naturally, that should take care of your tax liability.

But it also means you won’t get the full payment amount as outlined above because the money goes directly to taxes. 

National Defense Student Loan Discharge (NDSLD) 

You can qualify for partial military student loan forgiveness under the NDSLD. However, you have to enlist in the service for at least one whole year in a hostile fire area or imminent danger. 

If you’re sure you can qualify for the NDSLD, all you have to do is complete the necessary paperwork. In the paperwork, you have to give a detailed explanation of why you believe you’re eligible for the program. 

You won’t get total loan forgiveness, and the partial cancellation will depend partly on your loan servicer. If you want to proceed, get in touch with your student loan servicer and know how much debt you’ll be forgiven. 

Total And Permanent Disability Discharge For Veterans 

In your line of duty, if you become disabled permanently, the federal government will forgive all your federal student loans. For you to be eligible for the program, you should have documentation of your service-related disability. Also, the Department of Veterans Affairs must approve that you’re permanently disabled. 

Public Service Loan Forgiveness (PSLF) 

You may probably be aware that the Public Service Loan Forgiveness (PSLF) is not for only military personnel. Teachers, doctors, and government workers can also benefit from the program. Before you can be eligible for the PSLF, you must have a qualifying repayment plan and federal student loan. 

Also, you need to do the following: 

  • Work under a qualifying employer for ten years, 
  • Submit the necessary paperwork every year 
  • Make 120 loan payments on time. 

After fulfilling all these requirements, you can submit a PSLF application, and the federal government will forgive any outstanding student loans you have. For PSLF, any funds you get from PSLF doesn’t add to your taxable income in the year. That means it won’t increase your tax bill, unlike the CLRP. 

If you’re not interested or are not eligible for the CLRP, you can explore the PSLF if you’re a military member. However, you need to start with the PSLF as soon as possible after you graduate. That way, your 10-year mark will begin right away. 

Other Alternatives Besides Military Student Loan Forgiveness 

Aside from the main programs that offer loan forgiveness for military members, you may have other alternatives. You can reduce your student loan payments, such as enlisting for an IDR for federal student loans. We have an article, 4 Strategies to Lower Student Loan Payments, that delve deeper into specifically doing that. 

You can also consider refinancing your student loans to reduce your interest rate actively. And that can save you a lot of money. However, remember that you’ll lose any federal loan benefits when you refinance your federal student loans into private loans. And that includes federal student loan forgiveness, IDR plans, and many more. 

Pros And Cons of Enlisting In The Military Student Loan Forgiveness 

Enrolling in the military is not an easy choice to make. It’s a life-changing decision that will stay with you forever. No doubt, there are numerous advantages you get when you serve in the Armed Forces. But it’s also one of the most challenging and riskiest options to go with. 

Before you make your final decision, consider the following pros and cons of enlisting in the military for student loan forgiveness.

Pros

  • Depending on the program you choose and your eligibility, you can acquire money towards your student loan debt. And that can significantly help your financial future. 
  • Depending on the type of military you enroll in, you can receive health benefits and earn a salary. You can acquire this benefit in jobs that provide student loan forgiveness. 
  • There’s the opportunity to get discounted or free housing. 
  • You get an opportunity to serve your country and make an impactful difference. 
  • When you join the military, you acquire useful, high-tech, and marketable skills that can enhance your resume. The experience you get can help you establish a successful career, whether you stay or leave the military. 
  • You may get the chance to travel. And you could qualify for tuition assistance in the future together with the federal student loans you have already. 

Cons 

  • You can incur extensive physical and psychological damage. There are grave risks involved which could change your life forever. 
  • You may have no decision on where you’re sent and what the authorities ask you to do.
  • Joining the military involves emotional, mental, and physical sacrifice that demands perseverance, hard work, courage, and remarkable strength. If you’re joining solely because of your student loans, that might be a wrong idea. If your heart’s not in it, we recommend that you look elsewhere to get rid of your student debt.  
  • Depending on the role assigned to you, you may be in life-threatening and dangerous situations. 
  • You need to have a full commitment to serve for the required amount of time. And that could be challenging for you, especially if you get a change of heart. 

What To Know About the Student Loan Forgiveness For Military Members 

It can be tempting to sign up quickly when you get to know that you can get full or partial student loan forgiveness. But before you sign up, you need to have a detailed understanding of the contract. Here are some things you need to consider. 

Understand the severity of joining the military

Before you enlist in the military, you need to know what you’re in for. Get to know where you would be potentially doing, where you would be staying, the physical and emotional toll it will have on you, etc. 

Do your research

If you’ve never thought of joining the military, then you need to do detailed research. That will help you know if you’re ready to make such a decision.

Understand the terms and conditions of the contract

If you don’t have a deeper understanding of your agreement, get someone who understands to explain it to you. 

Know what happens if all doesn’t go well 

What happens if you sustain an injury? What are the right protocols to follow? Ask these types of questions, and more. 

Be sure that your student loans qualify for forgiveness 

Most of the student loan forgiveness programs for military members only applies to specific types of loans. Furthermore, some programs have conditions on how the loans will be used. So be sure to know all these things before you sign up. 

Before you enlist, ask about student loan forgiveness 

For most of these opportunities, you need to register before you enroll. 

Compare the various benefits of student loan forgiveness programs 

You need to know the amount that will be forgiven. You have to check your salary for each of them. Sometimes, the loan forgiveness may force you to accept a low salary. You need to consider all of them before you make a final decision. 

If you’re not interested in the military, consider other options 

Other alternatives are less life-threatening. You can volunteer for loan assistance, acquire a job that pays your student loans or move into an area that provides student loan forgiveness incentives. You can also consider consolidating your student loans to make your finances simple. There’s also the traditional way of earning extra money and sticking to a tight budget to pay your student loan debt. 

Conclusion 

You can qualify for the military student loan forgiveness if you’re a military personnel, veteran, or a college student who wants to join the military. However, you need to consider all the options available to you before you make a final decision. 

Ensure that you understand all the rules and qualification requirements for military student loan forgiveness programs before you sign up. We recommend that you get an expert who will help you go through all the decisions and help you make the right call. 

At Student Loans Resolved, we’ve been helping numerous students like you to gain financial freedom. We have qualified experts who can help you understand the options before you and give you accurate solutions. Give us a call right now at 800-820-8128, and we’ll gladly assist you today.