Military members take risks and overcome dangers for the sake of the country. However, in their demanding service, their spouses also endure many challenges. They help their military member spouses to adjust their lives frequently. In such a case, getting an education or even a long-term job opportunity becomes much harder. Hence, the government takes the responsibility to assist military spouses with student loans. When it comes to Military Spouse Student Loan Forgiveness, the government offers multiple options. This guide will discuss the top 5 forgiveness opportunities for military spouses.
Not all programs mentioned eliminate the debt directly. Some allow avoiding the debt in the first place, while others help to reduce debt obligations. Besides, we will present options for military spouses with private student debt.
Military Spouse Student Loan Forgiveness
Some borrowers wonder if they can access forgiveness programs specifically designed for military spouses. Unfortunately, currently, there is no such program. However, military spouses can enjoy alternative programs which will help to reduce or eliminate the debt obligations. This guide presents:
- Public Service Loan Forgiveness
- Teacher Loan Forgiveness
- Perkins Loan Forgiveness
- My Career Advancement Account
- Repayment Options
Those are the programs mainly accessible to federal loan borrowers. If you have private student debt, you can skip them and read the concluding sections where we briefly discuss private loan borrowers’ options.
1. Public Service Loan Forgiveness
While discussing forgiveness opportunities for federal loans, the Public Service Loan Forgiveness always comes at the top of the list. As its name suggests, this program eliminates the debt of people working in public sectors, including military personnel. The borrowers need to be employed full-time by governmental organizations or non-profits to qualify. The job type and income level do not matter unless the employer is eligible for the program.
This excellent student loan forgiveness for military spouses cancels the remaining debt after the borrower makes 120 payments. Although it brings a 100% reduction of debt, its eligibility conditions can be challenging. Make sure you read all the terms carefully to detect if you can qualify for this program.
Eligibility Conditions
The PSLF has requirements covering the loan characteristics, borrower’s eligibility, payment qualifications, etc. Such a long list of requirements is one reason why thousands of people fail to get forgiveness each year as they do not understand the eligibility clearly. We will try to explain it as clear as possible in this section. Keep in mind that you can also contact Student Loans Resolved experts to get more information or assistance.
Only Direct loans qualify for this program. If you have FFEL, Perkins, or private loans, it is advisable to check other programs.
Does Consolidation Loan Qualify?
Consolidating loans into a Direct loan will make the debt eligible for this program. However, the borrower will lose all the credits gained before the consolidation.
For example, imagine a borrower who made ten qualifying payments. If he/she decides to consolidate the debt, he/she will lose ten credit toward 120 required payments. As a result, the borrower will start all over again to progress toward 120 payments to get this Military Spouse Student Loan Forgiveness.
What does Qualifying Payment Mean?
Not all payments will count for the PSLF. Each payment should be made on time, in full amount. Besides, only the payments after October 2007 qualifies. The borrower needs to enroll in an Income-Driven Repayment plan to make qualifying payments.
This repayment plan has different categories, like Income-based or Revised Pay as You Earn repayment. You can choose one that suits you the best. However, other plans like Standard, Graduated, Alternative or Extended repayment do not qualify.
Sometimes borrowers are not required to repay the debt. Such cases happen when the borrower is still in school, or he/she just graduated. When the borrower can legally defer the payment, the eligibility for the PSLF is not lost.
The good side of this condition is that the payments do not need to be consecutive. It means there can be months when your payment fails to meet the qualifications.
You will not get credits for those months, but as soon as you start making qualifying payments, you will continue progressing toward this Military Spouse Student Loan Forgiveness program. Only after repaying the debt 120 times, which takes at least ten years, can the borrower apply for forgiveness and get rid of the remaining student debt balance.
Application to the Best Military Spouse Student Loan Forgiveness
Two main documents are necessary to validate your progress for the PSLF program. PSLF form and employer’s certification. Employer’s certification is included in the PSLF form, which is the evidence of qualifying work.
PSLF form should be regularly submitted because it notifies officials to check the progress for the forgiveness. As a result, they will send you a notice indicating how many qualifying payments you made. Hence, if there are any problems with the payment, you will detect them fast.
Application to this Military Spouse Student Loan Forgiveness program is possible by mail. The requests should be directed to FedLoan Servicing.
Taxability
This program is not taxable under the Internal Revenue Service code. Hence, the borrowers will not pay additional high taxes for the forgiveness they receive.
Expected Changes
When Biden announced his “Plan for Education beyond High-School,” he involved the PSLF in the plan. He noted that the program is overly complex and needs to be simplified. Hence, his suggestion is to grant $10,000 for each service year to eligible borrowers rather than waiting a minimum of 10 years to get eligible. Besides, borrowers will access this opportunity five times, which makes the total forgiveness amount $50,000.
We do not know yet when these changes will be applied or whether they will be put into law. However, considering Biden’s recent progress in student loan issues, the changes can be expected.
2. Teacher Loan Forgiveness
Another great forgiveness program that military spouses can access is Teacher Loan Forgiveness. This program can grant either $5,000 or $17,500 debt forgiveness if the borrower serves in a low-income school for five years. However, the service years should be consecutive. If there is any period of non-service, then the forgiveness will not be accessed.
Eligibility
This student loan forgiveness for military spouses has simpler requirements than the PSLF, considering that its benefit is also lower than the previous program.
In general, the applicant should not have a debt incurred after 1998 at the time of getting the new student loan. Only the borrowers with full-time teaching positions in eligible schools will qualify. For example, serving in low-income elementary or secondary school is acceptable.
There also exist conditions about educational achievements, licenses, etc., which you can check on the official Student Aid website. Alternatively, you can contact our debt specialists for your questions and concerns.
Difficulty Level
Military spouses can decide to be near their loved ones and hence, move from one place to another frequently. Teacher Loan Forgiveness requires five consecutive service years, which means the borrower should not leave work once started to progress for this Military Spouse Student Loan Forgiveness alternative. Therefore, receiving forgiveness can be a challenging task for military spouses.
However, there exist some considerations which can do incomplete service to be considered as complete. For example, the employer can decide that the service was enough to be considered as full-time, full-year work. For more information, check the Student Aid website.
Reward
This program grants either $5,000 or $17,500 to the applicants. The exact reward amount depends on the subject area taught by the teacher and other qualifications. For example, applicants teaching science or math can be eligible for the higher reward amount.
Keep in mind that if you have multiple federal loans, the reward will be again the same. It means the reward is not calculated based on the number of the loans and not granted for each loan.
Application
Once the borrower serves for five years, he/she can apply for forgiveness. The application should be made through the loan servicer. An essential part of the application is Employment Certification which will prove that the applicant meets the service requirement. For multiple loans, borrowers should submit an application form to each loan servicer.
TLF vs. PSLF
Teacher Loan Forgiveness is accessed faster- in 5 years, compared to the Public Service Loan Forgiveness, which grants benefit in a minimum of 10 years. However, the PSLF is better than TLF in many dimensions. First, the TLF only grants fixed forgiveness, either $5,000 or $17,500. This amount can be very small compared to thousands of dollars of student debt individuals owe. In contrast, the PSLF can eliminate the whole remaining debt.
Another disadvantage of TLF is that it has a narrow employment scope. Only teachers qualify for this program. However, the PSLF is accessible to public sector workers, including law officers, firefighters, etc.
Besides, there is no consecutive requirement for PSLF. If you miss some payments, you will still qualify for the forgiveness program. However, the TLF requires borrowers to work five consecutive years. If you are unable to work for some period for any reason, you will lose all less than five served years.
3. Perkins Loan Forgiveness
Although Perkins Loan Forgiveness is not accessible to a lot of borrowers, it is worth mentioning it. This Military Spouse Student Loan Forgiveness program can bring up to 100% debt cancellation if you have Perkins loans. In return, the program demands full-time service in eligible institutions.
In general, low-income educational institutions qualify for this program. Some people think that Perkins Loan Forgiveness is only accessible to teachers. However, it is misinformation. Many service types, including firefighters, law officers, public defenders, military personnel, or librarians, can qualify for this program.
For teachers, different from Teacher Loan Forgiveness, this program can bring full debt elimination.
How is the Reward Structured?
Similar to Teacher Loan Forgiveness, this Military Spouse Student Loan Forgiveness brings total benefits in 5 years. However, in this program, applicants will receive some forgiveness percentages for every service year:
- In the first and second service year, the borrower gets a 15% discharge
- During the third and fourth service years, the borrower gets a 20% discharge
- In the fifth year, the debt is reduced by 30%.
Borrowers need to know that the discharge rates include interest payments for the year. The benefit is the same for many people ( like firefighters or teachers), but AmeriCorps VISTA or Peace Corps volunteers can only receive up to70% debt reduction for four-year service.
What is Required in Return?
Sure, no forgiveness program comes without its costs- requirements. First, you need to have a full-time position in an eligible organization. In general, the employer defines how many hours correspond to full-time work. Once you work full-time for a year, you get the yearly benefit. For teachers, a one-year service requires two academic half-years, which should be consecutive.
If you have part-time work, do not worry. You can still qualify for this Military Spouse Student Loan Forgiveness program. However, you need to find another position so that working hours across multiple positions will equal the full-time work hours requirement. For teachers, working in an educational institution serving low-income families is a necessary requirement. You can check if your organization qualifies for this program on the Education Department’s website.
TLF vs. PLF
Teacher Loan Forgiveness and Perkins Loan Forgiveness can help military spouses who teach in low-income schools. However, there are some differences that applicants need to consider before choosing one.
Sure, Perkins Loan Forgiveness seems more attractive. It provides up to 100% cancellation, and forgiveness is achieved at the end of each service year. Hence, borrowers do not need to wait for five years to get some debt relief.
However, it is still advisable to talk to an expert. Only debt specialists like those in Student Loans Resolved can analyze your financial qualifications and choose the program where your chance to get forgiveness is higher. Selecting a program only because of its high benefit amount can be a wrong decision and delay the debt elimination process.
4. My Career Advancement Account
The three programs mentioned above help military spouses to eliminate their debt challenges. However, we should also mention My Career Advancement Account which allows military spouses to get an education without even incurring a student debt in the first place.
The Defense Department launched this program to stimulate spouse education and career development. Qualifying military spouses can get $4,000 to pay for their tuition fees. If you want to get a degree, certificate, or license, this program can finance the costs within the benefit amount’s limitation. Yet, not all schools will qualify for the benefit.
Keep in mind that $4,000 is not a one-time payment amount. The applicants can receive only half of it for one academic year. However, if the school requires a total fee which is $4,000 or less from the beginning, the program can grant this lump-sum amount.
Eligibility Conditions
If your spouse is an active duty military member who has pay grades of E1-E5, W1-W2, or O1-O2, you can apply to this program. The military member should serve in the National Guard or reserve.
The military spouse in need of this benefit should have a high-school degree. Spouses cannot be on active duty or reserve.
If you are legally separated by court order or law, you will not qualify for the program. Besides, keep in mind that if your spouse gets a higher pay grade after you receive the tuition assistance, you will still be eligible for the benefit.
Besides, the spouses can only apply during the timeframe covering the period between the date of order recall and 180 days prior to demobilization.
The Benefit
As mentioned before, different from Military or Veteran Spouse Student Loan Forgiveness, this program is an alternative that does not eliminate the debt. Instead, it helps not to incur the debt for getting an education. Military spouses can get up to $4,000 tuition assistance, but in most cases, this amount will be limited to $2,000 for an academic year.
Tuition assistance only covers the fee required by the school. It does not involve the costs for books, equipment, supplies, uniforms, transportation, or insurance. Besides, if a course is not in the required education plan, the program will not pay for it.
Should Military Spouse Repay the Debt?
Military Career Advancement Account is not a loan program that requires repayment. This program is a scholarship or tuition assistance that is gifted to the applicant. It means, as long as you follow regulations, none will ask you to repay the benefit. However, you will still be responsible for the rest of the educational costs that the program does not cover.
Besides, the officials will lock the accounts of military spouses who fail or withdraw. In such cases, it is advisable to contact your consultant. Otherwise, you will lose your eligibility to receive further benefits in the second failure until you pass the course.
It is possible to waive the cause for the first-time failure. For example, the military spouse can face medical issues which restrain the spouse from studying. In such a case, a higher-level officer should approve the waiver.
However, if you fail for the second time, the waiver will not be accessible. Additionally, be aware that currently, you do not need to pay taxes for this scholarship benefit.
5. Repayment Plans
As mentioned before, we did not only cover programs that grant forgiveness. We also discussed a program that helps to get an education without incurring debt. In this section, we present options to reduce the debt obligations.
Sometimes repaying the debt is easier than getting forgiveness. If you have federal loans, you can access multiple Military Spouse Student Loan Repayment, like Standard, Graduated, Income-Driven, etc. Each plan has its own repayment percentage and payback period. Hence, it can be easy to find the one which will fit your budget and help you pay off the debt quickly. Besides, if you choose plans like Income-Driven repayment, you will get forgiveness at the end of the repayment period for the remaining debt.
For clarification, let’s look at the terms of some repayment plans. If you get a Graduated repayment plan, you will pay less in the first years, and the payment amount will increase during the later years.
Therefore, if you have temporary difficulties and you believe your finances will get better in the upcoming years, a Graduated plan can be a great decision. Alternatively, a Standard repayment plan requires fixed payments over 10 to 30 years. You can check different repayment plans in our blogs or on the official Student Aid website.
Private Loans
The five programs mentioned above mostly cover federal loans. In other words, if you have a private loan, it is almost impossible to find a Military Spouse Student Loan Forgiveness alternative.
Instead, if you face financial difficulties to repay the debt, it is advisable to contact the lenders in the first place. Lenders can help borrowers who act responsibly and communicate the problems immediately. They can either stop collection for some period or reduce payment amounts. Some lenders provide death or disability discharge options.
However, lenders are not obliged to assist borrowers. They have no legal obligation to grant favorable loan terms if the borrower faces financial challenges.
Hence, the best method to reduce debt obligation becomes student loan refinancing.
Student Loan Refinancing
Refinancing happens when a borrower gets a new loan to pay out existing loans. Usually, borrowers refinance because the new loans have better terms. For example, new loans can have lower interest rates or be fixed-rate as opposed to existing variable-rate loans.
In this way, borrowers can save money or repay the debt when their income level is decreased. If the refinancing loan does not have better terms, it does not make sense to refinance at all.
Refinancing vs. Consolidation
Student loan refinancing can be confused with student loan consolidation. Consolidation happens when all existing loans are combined into one. Usually, people consolidate loans to simplify the repayment process rather than having better interest rates or saving money. Student Loan Consolidation mostly takes the weighted average of all existing loans. Hence it is almost impossible to make savings this way.
One can wonder then why people prefer consolidation? First, some Military Spouse Student Loan Forgiveness programs only cover Direct loans. It is possible to combine loans into Direct Consolidation to become eligible for such programs. Second, multiple loans usually belong to different loan servicers. It is hard to deal with many loan servicers as their operations and requirements vary. In this case, consolidation leads to a single loan from a single loan servicer.
Eligibility Requirement
The eligibility requirements for refinancing services depend on the service provider. However, there exist some general conditions applicable to many refinancing loans. The borrowers should have a good credit score and stable income to qualify. A good credit score is usually higher than 600. The lender assesses the credibility of the borrower through reliable credit performance. If you do not have it, the lender can also require a co-signer. The co-signer will take responsibility for repayment in case the borrower fails to repay it.
Many refinancing service providers offer pre-qualification tools on their websites. Borrowers can input their qualifications to this tool and see what rate of refinancing loans they will get if they are eligible in the first place. The benefit of this tool is beyond the determination of interest rates. This tool allows borrowers to check qualifications without hurting credit performance. If the borrower applies and gets rejected, the credit performance will be negatively influenced. However, pre-qualification does not bring such adverse effects.
You can apply to refinance multiple times as you see new opportunities.
Bonuses
Refinancing service providers usually offer bonuses for desirable actions. For example, there can be sign-in bonuses, reference bonuses, etc. Bonuses seem attractive. However, a lower interest rate should be more important than the existence of a bonus. Bonuses are short-term benefits. In contrast, a lower interest rate will lead to more savings in the long run.
If you want to apply for refinancing, you can consider checking the services of the best refinancing companies. Those are SoFi, INvestED, Citizens Bank, College Ave, etc. Keep in mind that a crucial factor in selection is the low-interest rate. Yet, having good customer support service or providing bonuses can be desirable.
Debt Settlement
Another solution to borrowers with private loans can be debt settlement. Sure, a settlement is different from Military Spouse Student Loan Forgiveness which can bring debt elimination in return for service. However, the settlement also helps to avoid debt obligations.
Settlement usually works in the following way; first, the borrower contacts a debt settlement company. The company analyzes the finances and creates a saving plan. The borrower usually stops repaying the lenders and saves the money each month in the bank account. Once there is a significant amount collected, the debt settlement company contacts the lender to convince them to take the lump-sum amount for the debt repayment.
One may wonder what the benefit of this method over repaying the debt on time is. The main advantage is that the collected amount is usually lower than the debt owed. The lender can only accept the lower amount if the lender receives it in a lump-sum amount rather than over the course of months. Yet, there is no guarantee that the lender will accept this request.
Besides, the lenders can get angry over stopping repayment, and they can involve legal actions. Hence, debt settlement is risky and should not be considered unless there is n another way of repaying the debt.
Final Words
Military members risk their lives and comfort for the sake of the country. However, their spouses also bear the struggles together with the military members. Hence, the government takes care of military spouses by providing several benefits for debt repayment or to get an education. This guide presented three debt forgiveness programs and two other alternatives to cover tuition fees and repay the debt easily. Besides, we discussed some options for private loan borrowers who do not have access to forgiveness programs.
Get an Expert Help
We are aware that neither of the mentioned options is specifically designed for military spouses, except the tuition assistance program. Hence, military spouses should have additional qualifications like teaching in a low-income school or serving in a public sector. In all cases, it is hard to select a program that provides the highest benefit among the options that the spouse is eligible for.
Therefore, it is advisable to get expert help. Our debt specialists have helped thousands of borrowers facing the same struggles as you do. We have been in the student debt industry for many years, which helps us to identify the best options for your debt easily.
Besides, our experts will guide you throughout the whole Military Spouse Student Loan Forgiveness application and progress period to ensure you do not lose your chance because of technical mistakes. Contact us now to maximize your chance for a debt-free future.
