Serving in the military is a challenging task; it involves dangers and challenges that many other positions lack. It is ironic if a military officer goes into harm’s way and yet returns home to struggle with debt payments. Luckily, military positions offer many incentives to attract young people. If you have student debt, you need to know that there exist forgiveness and repayment plans for military members. One of such programs was CLRP Air Force which brought around $10,000 benefit. Unfortunately, this program is discontinued.
This guide will present the College Loan Repayment Program of the Air Force and discuss the alternatives to this option, including eligibility, the award process, etc. Here is the summary of this guide:
- College Loan Repayment Program of Air Force
- JAG Student Loan Repayment Program
- JAG Continuation Pay
- Public Service Loan Forgiveness
- Income-driven Repayment Plan
CLRP Air Force
Previously, there was an Air Force College Loan Repayment Program which brought around $10,000 loan forgiveness. However, it was defunded during recent years. Hence, Air Force servicers lost their access to the forgiveness opportunity.
The program aimed to increase the attractiveness of enlistment when the military needed to recruit more prospects. It provided one-third of the total award or $1,500, whichever is greater, for each service year.
The eligibility conditions of the CLRP Air Force were pretty simple. It required signing for the program during the initial contract paperwork. The qualifying applicants could not have previous military service, enlist for at least four years and forgo Post- 9/11 GI Bill benefits if enlisted not more than six years. The program covered Direct, Perkins, Parent PLUS, and other loans.
However, as mentioned, this program is no more accessible as of the writing time of this guide. Yet, some other programs can help Air Force officers get aid for educational debt.
JAG Student Loan Repayment Program (JAG SLRP)
In this section, we will focus on another important program that can be an alternative. This program is provided by Judge Advocate General’s (JAG’s) Corps, and it can bring a maximum of $65,000 repayment for a college education. In return, the program requires eligible candidates to serve as a JAG officer.
The benefit is only achieved after the service is provided. It is possible to utilize the program for three years, and the lenders will get paid after each service year. Keep in mind that this CLRP Air Force transfers repayment funds directly to the lender instead of the applicant.
If you have student loans for education in a law school, undergraduate/graduate programs, you can apply to this program. The problem is available to:
- Active Duty and Retired Regular Air Force
- Federal/State Active Duty, Drilling, Retired Personnel of Air National Guard
- Active Duty, Drilling, Retired Personnel of Air Force Reserve
For simplicity, we will focus on the active-duty members of the regular Air Force. However, if you belong to other categories, you can check the official website.
Eligibility Conditions
This CLRP Air Force aims to help highly qualified JAG Officers- those with professionalism and leadership skills. The program depends on the availability of funds. Hence, it is not surprising that the eligibility conditions can be tough.
The eligibility requirements include being an active duty Air Force officer who is serving as a Judge Advocate. The officer should be in the first four-year period of service. After this four-year period, the officers are eligible for another program called JAC Continuation Pay. We will discuss this program in subsequent sections.
Keep in mind that even if you do not apply for the pay benefit, only qualifying for the program will make you ineligible for this alternative to CLRP Air Force.
Besides, the applicant should be ethically and professionally suitable, including not having any restrictions.
Loan Requirements
Education loans, including Direct and Perkins loans, qualify for this program. The lender should be a state agency or a non-profit organization designated by the state. If you have a consolidation loan, you can qualify for this CLRP Air Force.
However, if you consolidate the loan with, e.g., a spouse who does not qualify for this program, only your portion of the debt will be repaid. Therefore, the applicants are required to provide necessary documentation that indicates how much the applicant owes separately in a consolidated loan.
The loans should also be in good standing. Having a deferment or loan forbearance status will not affect eligibility negatively as long as the borrower can repay the debt.
Award and Commitment
This alternative to CLRP Air Force requires eligible candidates to be in 1st, 2nd, or 3rd year in service. Such officers can apply to the JAG Student Loan Repayment Plan. In return for the awards, the borrowers need to agree to serve a minimum of four additional years. However, the benefit can be utilized only for three years. As the borrower completes a year of service, the officials will send the funds to the lenders.
For each service year, borrowers can get a maximum of around one-third of the total benefit amount (around $21,666.67 out of $65,000). In this way, $65,000 forgiveness will be achieved in three years. However, if the remaining debt is less than the ⅓ of benefit, you will get as much as you need.
Taxation
Some federal forgiveness programs like Public Service Loan Forgiveness are not taxable. It means borrowers do not need to pay additional taxes from the forgiveness award. Unfortunately, JAG Student Loan Repayment Plan is subject to taxes. As mentioned before, at the end of each service year, the officials will send the funds to the loan servicer, lender, or holder.
As taxes apply to this amount, the total tax attributable will be deducted from the award amount before sending it to the lender. Hence, the benefit received will be less than the actually claimed award. However, keep in mind that the officials still consider untaxed amounts for the maximum limits and documentation.
Some Other Considerations
Before applying to this alternative program to CLRP Air Force, you need to consider two elements. First, you will still be required to make interest payments because forgiveness only applies to the principal balance. In other words, you need to comply with loan obligations that the lender specifies for the interest payments. Second, the JAG Student Loan Repayment Program’s service years will not be counted as mandatory service to receive Post-9/11 GI Bills benefits.
Again, keep in mind that this guide focused on the active-duty officers in the regular Air Force. If you are retired or belong to another category mentioned in the beginning, check the official website for more information.
JAG Continuation Pay
This bonus is aveilable to JAGs that stay in the service after the first four-year service period. In this case, the eligible JAGs can get a $60,000 cash bonus. Sure, this opportunity is not like a repayment or forgiveness program. In forgiveness options, the funds are distributed so that borrowers can repay the debt. Besides, the officials send the funds directly to the lender in most of the forgiveness programs.
However, this opportunity is cash delivered directly to the applicant. The eligible JAG decides how to use the money - invest it, spend on monthly expenses or repay the debt. As you can also use the funds to repay the debt, cash benefits for JAGs can be a way to resolve the student loan debt. JAGs with student loans can use this money to eliminate some portion of the debt.
Yet, keep in mind that you will not be able to receive $60,000 at once. After the four-year service ends, the JAG can choose to continue with two more service years. As a result, the JAG will get a $20,000 bonus. When 6-year service is completed, if the JAG agrees to serve four more years, a $40,000 bonus will be received. In short, this continuation pay brings a total of $60,000 benefit in return for ten years of service as JAG. Therefore, it can be viewed as an alternative to the CLRP Air Force.
Public Service Loan Forgiveness
If you do not qualify for the alternatives mentioned above to CLRP Air Force, here is an excellent program for you- Public Service Loan Forgiveness. As its name suggests, this program targets public sector employees, including non-profit workers.
Military officers for U.S armed forces or National Guard can apply to this program to eliminate full debt. However, first, the borrowers need to make 120 qualifying payments. Any amount remaining after 120 payments will be eligible for forgiveness.
Eligibility Conditions
If you serve in the military, there is a high chance that you will meet requirements about employer and employment details. For example, the applicants should work full-time in a public position. There also exist conditions for loans. Only Direct loans qualify for this program. If you have FFEL, Perkins, or private student loans, you will not meet the eligibility conditions.
Meanwhile, consolidation loans will also qualify for this program. However, only the payments after consolidation will be counted. For example, if you made ten payments and then consolidate the loan, you will start all over again to progress toward 120 payment requirements.
Keep in mind that not all payments will be counted for this alternative to CLRP Air Force. The payments should be made on time or a maximum of 15 days after the due date, in the full amount shown on the bill.
Besides, you need to enroll in an Income-driven repayment plan to make qualifying payments. Luckily, the loan payments do not need to be consecutive. If you make some unqualifying payments from time to time, you can still progress toward 120 payment requirements later.
How to Apply?
120 payments take a minimum of 10 years of effort. During this time, many conditions can change. Hence, it is necessary for borrowers to submit the PSLF Form regularly. Through this form, the officials can check if your payments qualify for forgiveness. Otherwise, you might find out that you are not eligible for this alternative to the CLRP Air Force after wasting years on repayment.
The completed form and the certification from the employer should be sent to the loan servicer of Public Service Loan Forgiveness- FedLoan Servicing.
Taxability
As mentioned before, Public Service Loan Forgiveness is not taxable under the Internal Revenue Service code. It means you do not need to pay extra income tax for the forgiveness received.
Income-Driven Repayment Plan
Another simple program to receive forgiveness is the Income-Driven Repayment Plan. This program allows borrowers to get custom repayment amounts that fit their income level and family size. As a result, the repayment becomes more affordable.
There exist four types of Income-Driven Repayment options- Revised Pay as You Earn, Pay as You Earn, Income-based Repayment, and Income-Contingent Repayment plan. Though the conditions for each repayment plan vary, you will get forgiveness for the remaining amount after the payback period in all four plans.
Payments
Payments under this loan repayment plan are calculated considering some percentage of the discretionary income. Discretionary income is the amount left after deducting necessities and taxes from the revenue. The payment levels are:
REPAYE - 10% of discretionary income
PAYE - 10% of discretionary income (and less than payment under Standard plan)
IBR - 10% or 15% of discretionary income ( depending on when you got the loan)
ICR- either 20% of discretionary income or fixed payment over 12 years.
Similarly, the repayment periods are different depending on the repayment plan. For example, with PAYE, it takes 20 years, while with ICR, it takes 25 years to repay the debt. IBR and REPAYE can last 20 or 25 years, depending on the loan’s education type or timing.
Which Option to Choose?
The government luckily cares about the military personnel, including CLRP Air Force. There exist some programs targeting specifically such borrowers. Besides, you can also access general programs like Public Service Loan Forgiveness and Income-based repayment plans. However, it is understandable that you might feel confused about these options if you lack financial knowledge. After all, it is hard to understand which option brings the most benefit without much hassle. Therefore, it is advisable to get expert help like those in Student Loans Resolved. Our debt specialists can help you to choose the best program while guiding you throughout the whole process. If you want to eliminate your debt fast, contact us immediately.
