Being married to a military member brings many difficulties. You might be required to adjust your lifestyle frequently during deployments and missions. It can be hard to continue education, see loved ones, or even plan your future under these conditions.
However, luckily, the government recognizes the dedication and challenges of military service members and their spouses. Therefore, military spouses are subject to multiple options when it comes to their student loans.
Some of these benefits come in the form of forgiveness of the existing debt, while others help to avoid the debt in the first place. This guide will focus on the Military Spouse Student Loan Forgiveness options and other programs to ease the debt repayment plans.
1. Public Service Loan Forgiveness
When talking about Military Spouse Student Loan Forgiveness, the first program that should come to mind is the Public Service Loan Forgiveness. It is an excellent opportunity that allows discharging the federal loans after making 120 qualifying payments. People working in public service, including military members and spouses, qualify for this program. However, this federal assistance opportunity has a complex list of requirements. Besides, it is expected that the forgiveness program will change once Joe Biden starts to implement his proposed student loan plan.
There are different requirements for the borrower, loan, payments, employment type, etc/ It is advisable to get full information by visiting the official website or contacting our debt experts.
For example, only federal loans qualify for this Military Spouse Student Loan Forgiveness option. These loans should be under the Direct Loan program. Others, like FFEL, Perkins, or private debt, will not qualify.
If you have consolidated the loans recently, only the payments will be considered for progress toward 120 payments after the consolidation.
Which Payments Qualify?
As mentioned before, before receiving the forgiveness benefits, military spouses need to make 120 successful payments. Such payments should be made after October 2007 by utilizing a qualifying repayment plan. The payments should be made on the due date or 15 days past this date, in full. Some periods do not require payments, such as a grace period for 6 months after graduation. Additionally, if you are in forbearance/deferment, you do not need to pay the debt and still keep your eligibility.
Keep in mind that 120 payments do not require to be consecutive. Hence, the minimum period for forgiveness is 10 years.
The qualifying repayment plans are the subcategories of the Income-driven Repayment option; other repayments, such as Graduated, Standard, Extended or Alternative plan does not qualify.
How to Apply?
One needs to complete the PSLF form and employer’s certification before sending them to the loan servicer. FedLoan Servicing the loan servicer for this Military Spouse Student Loan Forgiveness program. Applicants can submit the documents by mail, fax, or through FedLoan Servicing’s website if this company is already your servicer.
Whether you have already made 120 payments or still working toward it, you can submit the PSLF form. In this way, the loan servicer will determine your qualifying payment numbers and inform you. It is a good way to keep track of the progress.
Some Considerations for PSLF
Before applying to this program, you need to fully grasp the program’s benefits, process, and downsides. Hence, one should do thorough research or get help from debt experts like those in Student Loans Resolved.
In general, borrowers should not attempt to qualify sooner by making higher payments. Keep in mind that what matters is the number of payments instead of its volume. In other words, as long as you make the payment shown on the bill, you will get a credit. Higher payments are unnecessary.
Borrowers will not be required to pay income-tax from the forgiven amount. Under the tax codes of the Internal Revenue Service, this amount is not taxable.
Additionally, it is advisable to submit the PSLF form periodically. In this way, you can monitor the payment progress. Besides, if you do not submit the form when you want to get forgiveness, you will be required to submit multiple employment certificates for each employer you worked with.
Expected Changes in 2021
Due to its massive benefits, Public Service Loan Forgiveness is one of the most preferred Military Spouse Student Loan Forgiveness options. Therefore, it should not be surprising that the program is in the government’s heavy attention. President-elect Joe Biden proposed making some changes to this opportunity in his student loan plan. The plan aims to simplify the PSLF process. Hence, Biden proposed that instead of waiting for 10 years, borrowers should be able to receive some benefit for each year of public service. In more details, debtors can get $10,000 for every service year, up to 5 years.
It can be expected that the change will be implemented in 2021. If so, then not the whole debt but $50,000 forgiveness will be granted. Still, the program process will be simpler. However, keep in mind that this is only a proposal. It means the change will be legal and put into law once Congress approves it.
2. Teacher Loan Forgiveness
Teacher Loan Forgiveness is another form of Military Spouse Student Loan Forgiveness. As its name suggests, this program benefits teachers. However, the general condition is that the teacher should complete a 5-year service team as a full-time teacher in low-income schools. As a result, the teacher can be eligible for a maximum of $17,500. This program is applicable only if the applicants have Direct Stafford Loans.
The eligibility conditions of this Military Spouse Student Loan Forgiveness program can be simpler than the PSLF. However, it might not be suitable for all military spouses.
First, there should not be an outstanding debt after or in October 1998 when the applicant received the student loan. Second, the applicants should have a full-time job in teaching. Yet, there are conditions for eligible teaching positions. For instance, the teacher should work in a qualifying school, such as low-income elementary or secondary educational organizations. Besides, the loans should be incurred before the teacher completes the five-year mandatory service.
How Difficult is Getting This Benefit?
Usually, the military involves deployment and moving to different places. The eligibility criteria for this forgiveness program is that the teacher should serve for five consecutive years. It means, once an applicant starts working toward five years of service condition, they cannot leave the work. Hence, for some military spouses, this condition can be hard to achieve.
However, some conditions can make incomplete years considered as completed. For example, if the teacher at least fulfills one-half of the year of service, or the employer decides that the commitment of the teacher was enough to be considered as the full-year work, the applicants will not lose their qualifications. Besides, the Family and Medical Leave Act of 1993 provides some conditions for such cases.
Benefits of Forgiveness
As mentioned before, applicants can get a maximum of $17,500 forgiveness from this Military Spouse Student Loan Forgiveness program. In more detail, the benefit is either this amount or $5,000. The exact rate depends on which subject the applicant is teaching. If the applicant has multiple qualifying loans, the benefit is also restricted to the mentioned amounts for all of them, not individually. In general, if you are teaching science, mathematics in secondary schools, or you are a special education teacher, you can get the highest amount of benefit – $17,500. In other cases, applicants will mostly receive $5,000 forgiveness.
The PSLF vs. Teacher Loan Forgiveness
Both of these programs are available to federal loan borrowers. However, the Public Service Loan Forgiveness seems like a better option for military spouses. First, the benefit of the PSLF is higher than the forgiveness for teachers. Second, Teacher Loan Forgiveness has a narrow scope of employment. It only benefits if you are serving as a teacher, while the PSLF covers a wide range of public services. Third, the conditions of Teacher Loan Forgiveness can be hard to achieve. As mentioned before, serving for five consecutive years requires commitment. If the applicant needs to leave the position for deployment or other military-related reasons, the spouse can lose the qualifications. Meanwhile, the PSLF does not require 120 payments to be consecutive.
It should also be mentioned that if you do not qualify for the PSLF, but Teacher Loan Forgiveness, it is worth a try. Some applicants might be eligible for both programs. In this case, keep in mind that you cannot apply to Military Spouse Student Loan Forgiveness options in the same period. For example, you can first start to apply for Teacher Loan Forgiveness and complete the mandatory service. During this service time, your payments will not qualify for the 120 payment requirement of the PSLF.
Application to TLF
If you decide that Teacher Loan Forgiveness is suitable for your conditions, you can apply by submitting the application form to the loan servicer. Borrowers can only apply after completing the five-year mandatory service condition. Therefore, the school officials should also confirm the qualifying service through the certification part of the form. If the debtor has multiple loans, he/she should submit the form for every loan servicer.
3. Perkins Loan Forgiveness
Speaking of teachers, they also have access to another program called Perkins Loan Cancellation. Such a Military Spouse Student Loan Forgiveness program can eliminate up to 100% of the existing Perkins loan. However, in return, the applicant should work full-time in a qualifying organization as a teacher. Usually, teachers serving in schools for low-income students, special education teachers, or those with mathematics, science, languages areas can qualify for this program. Only the directly- employed applicants are eligible, and post-secondary school teachers cannot apply for the cancellation.
Benefits of Cancellation
Similar to Teacher Loan Forgiveness, this cancellation program also can be completed in five years. It can eliminate the whole outstanding balance in return for five years of service. In the first and second year, the applicants will get a 15% cancellation. During the next two years, 20% or, in total, 40% of forgiveness is granted. In the last year of the service, the original balance will be reduced by 30%. Keep in mind that these rates also include the interest payments accumulated during the service year.
In order to qualify for this Military Spouse Student Loan Forgiveness program, applicants need to work full-time in qualifying organizations. There is no exact limit for full-time work. Usually, the employing organization determines the required hours for full-time jobs. As mentioned before, forgiveness is granted per academic year of the service. The academic year is a school year or two half-years. However, keep in mind that these two half-years should be consecutive.
Luckily, part-time working people can also apply to this program. They need to have multiple qualifying positions in order to meet the full-time requirement. Additionally, private schools qualify for the cancellation only if they have a non-profit organization status under Internal Revenue Services. Alternatively, it should serve elementary or secondary education courses.
If you work in a kindergarten or a preschool, your workplace qualifies only if it provides a service as a part of a state education program.
Sure, working in a low-income school is the main condition though there exist the above-mentioned exceptions. If the applicant is unsure whether the school serves low-income students, he/she can check the Education Department list.
Which Program is Better for Teachers?
In this guide, we mentioned two suitable programs for military spouses based on their teaching profession. If a borrower is eligible for both, it is advisable to do thorough research and choose the one with the highest expected benefit.
However, we also understand that many people lack experience and knowledge in debt management. Hence, they will face a hard time evaluating their options and deciding correctly on one program. Therefore, we advise you to contact a third party debt specialist, like Student Loans Resolved, immediately.
Our experts have helped hundreds of struggling borrowers in their debt challenges. The debt specialist we work with will collect much information about your financial situation and develop a resolution plan. Besides, we will be by your side from the very start to the final stage of the debt elimination process. Contact us now for more information.
4. My Career Advancement Account (MCAA)
While some programs allow eliminating existing student debt, others create opportunities to get an education without incurring the debt. One such program is the My Career Advancement Account scholarship for military spouses provided by the Department of Defense as a part of Spouse Education and Career Opportunities. Military spouses can get $4,000 to cover their tuition. The benefit can be received for a degree, certificate, or license acquisition. However, it should be used for a qualifying school. We will come back to eligibility conditions in the following sections.
Although the total benefit is $4,000, there is a cap for a yearly amount- $2,000. In some cases, this cap can be waived. For example, if the school requires upfront payments, but the total cost is not more than $4,000, the yearly cap can be ignored.
The eligibility conditions require multiple elements. First, the service member should be on active duty. There are also specific pay grades eligible:
The active-duty service members should serve in the National Guard and Reserve with Title 10 order. Luckily, in 2020, Coast Guard member spouses also became eligible. Besides, the spouses need to have a high school degree. Spouses should be married to the service member of National Guard or Reserves satisfying above pay grades will qualify.
Understandably, the conditions can be unclear. Therefore, we will look into those who do not qualify. First, even if the service member is on Title 10 order, the spouse will not qualify if they are legally separated. Such separation can be based on state law or court order. Additionally, if the spouse himself/herself is on active-duty, guard, or reserve, he/she will not qualify. We already discussed the pay grade eligibility condition. However, it is possible that the service member has a higher pay grade. In this case, the spouse does not qualify. Yet, if the promotion to a higher grade happened after acceptance for a scholarship, the spouse does not become ineligible.
The right time-frame to apply for this scholarship opportunity is from the date of order for recall ( or mobilization) to 180 days before demobilization. Hence, the spouse will qualify during the activation and deployment period in between these time limitations.
What will the Program Cover?
Military spouses should keep in mind that this program only covers tuition fees. Hence, it has a minimal scope when it comes to expense coverage. For example, if the course is not included in the education plan, the scholarship will not cover it. Besides, there is no reimbursement for already paid courses. Books, equipment, uniforms, accommodation, child care, transportation, and medical services are not included, as well. You can check the extensive list of coverage here.
Are You Obliged to Repay the Benefit?
My Career Advancement Account is a scholarship program. Therefore, it does not require repayment. Yet, you will be required to pay the excess of the costs that MCAA does not cover- any amount remaining after the $4,000 limit.
Additionally, keep in mind that if you fail or withdraw, you will need to contact the consultant because the account will be locked. In the second failure case, the military spouse will not receive any further benefit until he/she completes the course successfully.
In some cases, a waiver can be applied to the first failure. If there is a medical problem, emergency leave requirement, or re-assignments, the waiver can be applied. However, someone higher in the hierarchy – Supervisor, First Sergeant, etc. – should approve the waiver. Besides, the waiver will not be helpful if the scholarship beneficiary fails for the second time.
Lastly, one does not need to pay the tax from the scholarship benefit at this writing time.
How to Apply?
Interested military spouses should enter the official website and submit the necessary information. In this process, the applicant will need a DS Logon. DS Logon is an ID used in multiple platforms, like TRICARE or MySECO. Besides, before application, check the list of qualifying schools.
5. Repayment Plans
In this guide, we have talked about many different types of Military Spouse Student Loan Forgiveness. Some of them help to eliminate the debt, while others help to study without incurring debt. However, not everyone will be eligible for the above-mentioned options. Sometimes it is easier to pay off the debt than trying to find a way to get rid of them through forgiveness. If you have a federal loan, repayment will be even more accessible for you than borrowers with private loans.
The government provides various repayment plans intending to empower borrowers to pay back their student loans effectively. There are four main types of repayment plans:
- Graduated Repayment
- Standard Repayment
- Extended Repayment
- Income-driven repayment plans.
Each of these options has its own terms and conditions. For example, a Graduated repayment plan allows borrowers to pay less in the first years. As time passes, the amount of the debt payment per month increases. If you think that the financial difficulty is temporary and you will have a better job in the future, this program can be suitable. On the other hand, borrowers pay a fixed amount for 10 to 30 years with a Standard repayment plan. The next program- Extended plan- as its name suggests, has a longer payback period. Usually, borrowers pay off the debt in 25 years with this plan.
There is a reason for keeping this plan till the end. The Income-driven repayment program has four different types, and each of them deserves mentioning. In general, as the name suggests, this repayment plan depends on the income level. Hence, it is one of the most suitable repayment plans for many federal loan borrowers. The Income-driven repayment plans are:
- Revised Pay as You Earn (REPAYE)
- Income-contingent plan
- Income-based plan
- Income-sensitive plan
REPAYE program covers Direct loans. It usually requires 10% of the discretionary income, and the debt can be repaid in 20-25 years. After this period, the remaining debt is forgiven. Meanwhile, with an Income-based plan, borrowers can be required to pay 10-15% of their discretionary income as debt repayment. The payback period is similar to REPAYE.
The Income-contingent plan is based on 20% of the discretionary income. Alternatively, the payment amount can be fixed and equal to the repayment plan in 12 years. If, after 25 years, there is still an outstanding balance, it will be forgiven. Lastly, an Income-sensitive plan is available if you have a Federal Family Education Loan. Borrowers can fully pay off their debts in 15 years, thanks to this opportunity.
As you already noticed, your repayment plan options are vast. Hence, it is necessary to choose the most beneficial one. Do not forget that while the new repayment plan can make the debt management process easier, it can also eliminate the Military Spouse Student Loan Forgiveness eligibility through the PSLF.
Unfortunately, many options for Military Spouse Student Loan Forgiveness are not available for private loan borrowers. Such debtors need to contact their creditors and ask for their options. Some lenders provide a forbearance/deferment period for the borrowers if they face emergencies or temporary financial difficulties. Others might grant death or disability discharge.
Private loan borrowers can also use refinancing services. Refinancing will not eliminate the debt as in the case of Military Spouse Student Loan Forgiveness. However, it can reduce the debt obligations and bring some relief from the monthly payment amount.
6. Refinancing Services
Refinancing involves taking a new loan to pay off all existing loans. These loans can be federal or private debt. As borrowers get rid of their multiple loans in return for a single new loan, their repayment process is simplified. Besides, refinancing is even more beneficial when the new loan brings more favorable terms. For example, it is possible to get a lower interest rate with a refinancing loan. In this way, the borrowers will pay less each month compared to what they paid for the existing loans.
Refinancing can be similar to a consolidation strategy for your debt. Consolidation involves combining loans into one to simplify the repayment process. However, it is less likely that the consolidation will deliver more favorable terms. In most cases, the interest rate is not lower, but the weighted average of existing rates. Yet, it is possible to get less monthly payments. The reason is that consolidation can prolong the payback period. In this way, a debtor pays less per month.
Best Refinancing Service Providers
If you have private loans, refinancing can be the most accessible and beneficial strategy to manage the debt. There exist many service providers which you can choose. Some of the best student loan refinancing service providers are:
- Advantage Education Loan
- Citizens Bank
- College Ave
- Education Loan Finance
- Laurel Road
- Commonbond, etc.
Sure, each of these refinancing companies provides different conditions. Hence, it is crucial to make a deep analysis before choosing a company. They can have a variety of interest rates, bonuses, payback periods, support levels, etc. You can get more information about the best refinancing companies in our blogs.
Qualifications for refinancing services can change depending on the service provider. However, there are some general eligibility conditions. In most cases, borrowers should have a stable income, good credit history, and a co-signer to get a refinancing loan. A credit score of more than 600 is desirable. Co-signers ensure that if the borrower does not repay the debt, they will cover the obligations.
It is possible to utilize refinancing services multiple times. However, it is better to pre-qualify first instead of applying directly. Pre-qualification is the process of submitting the necessary information to determine the interest rate the borrower will be obliged to pay. Sure, this process will first determine the eligibility. If the borrowers apply multiple times without pre-qualification and get rejections, their credit scores might fall. Pre-qualification can be tested on the official websites of many leading refinancing service providers. All the borrower needs to do is submit the documents online and wait for the response.
Interest Rates over Bonuses
Some refinancing companies provide bonuses to attract borrowers. Bonuses can grant small benefits. Borrowers can collect bonuses when they sign up, refer a friend, or complete an application. However, keep in mind that you should go with the latter if you need to choose either a bonus or a lower interest rate. The reason is that lower interest rates are more beneficial in the long run compared to small uses of bonuses. Hence, the trade-off between bonus and reduced interest should always end with a lower rate.
This guide presented several Military Spouse Student Loan Forgiveness options. Some of these options completely eliminate the debt in return for mandatory service, while others help borrowers easily pay off the debt. Forgiveness programs, repayment plans, refinancing services are available to military spouses to end or simplify the debt repayment process.
If you want to fully eliminate the debt, you can check the Public Service Loan Forgiveness, Teacher Loan Forgiveness, or Perkins Loan Cancellation. Alternatively, repayment plans can bring forgiveness after some years. Unfortunately, there are not many opportunities for private borrowers. However, we can recommend a refinancing service if it fits the conditions. Lastly, keep in mind that it is also possible to get an education without even incurring debt for military spouses.
If you cannot decide which program you qualify for or you should choose, you can contact our experts. We work with debt specialists who have years of experience and connections in the field. They will collect your financial information and analyze it to decide the most suitable option. As the debt experts have worked with hundreds of borrowers like you, they know exactly what can be the best solution to your debt problems. Do not forget that time is the biggest enemy of a borrower. Do not waste time and contact us soon.