Those serving in the military may be eligible for military student loan forgiveness. Military forgiveness programs come with conditions and aren't available to everyone, but they can be quite generous for those who qualify. And for military members who aren't eligible, there are still a variety of benefits that may be available, such as interest waivers and repayment postponement.
What is military student loan forgiveness?
Military student loan forgiveness programs are generally used by branches of the armed forces as recruitment and retention tools. Not everyone is eligible. On top of requirements related to minimum time served and other conditions, some forgiveness programs are restricted to those taking specific jobs within the military.
Most programs cap forgiveness, either annually, in total, or both. Private student loans are generally excluded from these programs, although those in the military can access benefits that reduce the burden of paying back both Federal and private student loans.
Five military student loan forgiveness programs
There are a wide variety of student loan forgiveness programs available to members of the armed forces. Each branch of the military offers its own set of programs, and those serving may be eligible for broader programs that aren't military-specific. In addition to forgiveness, military members may be eligible for a variety of benefits that make paying back student loans less burdensome.
While there are many distinct military student loan forgiveness programs, here are five notable programs available to borrowers.
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1. Loan Repayment Program: Army Active Duty
Highly qualified applicants entering the U.S. Army may be eligible for substantial student loan forgiveness if certain conditions are met. Only soldiers enlisted in certain critical Military Occupational Specialties, or MOSs, can participate in this loan repayment program. Other conditions include agreeing to at least three years of service, declining enrollment in the GI Bill, having a high school diploma, and a few other requirements.
If all conditions are met, the Army will repay one-third of the outstanding principal balance or $1,500, whichever is greater, after each year of service for up to three years, with a cap of $65,000 less taxes. Any loan made under the Federal Family Education Loan Program, the William D. Ford Federal Direct Loan Program, or the Federal Perkins Loan Program is eligible. Notably, private loans are not eligible for forgiveness.
2. Loan Repayment Program: Army Reserve Active Duty
For those entering the Army Reserve on active duty without any prior military service, the Army offers a less-generous version of its student loan repayment program. Many of the requirements are the same, although soldiers must enlist for at least six years to be eligible. The same restriction on eligible MOSs applies.
For those who qualify, the Army will repay 15% of the outstanding principal balance or $1,500, whichever is greater, after each year of service up to a cap of $20,000 less taxes. The same restrictions on the types of loans eligible applies to this version of the program as well.
3. Coast Guard Student Loan Repayment Program
The U.S. Coast Guard offers a student loan repayment program aimed at boosting recruitment and retention. Student loan repayment benefits up to $10,000 annually, with a cap of $60,000 total, are available.
Approval is not a guarantee. For recruitment purposes, loan repayment can be authorized in cases where the lack of such benefits would hinder the ability to fill a position with a highly qualified candidate. Benefits are terminated if the employee leaves the Coast Guard for any reason. Three years of service is required for any repayment, and six years is the minimum for the full $60,000 benefit.
4. Air Force Judge Advocate General's Corps Student Loan Repayment Program
Those serving in the Judge Advocate General's Corps (JAG) are eligible for up to $65,000 of student loan repayment benefits. Judge Advocates become eligible after completing each of the first three years of service, although they must complete a total of four years of service.
Annual payments are capped at one-third of the outstanding loan principal balance, or $21,666.67 for the first two years and $21,667.66 for the third year. Federal income taxes will be withheld from the loan payment, reducing the after-tax benefit. This benefit is not guaranteed and depends on funding and approval.
5. Public Service Loan Forgiveness
The Public Service Loan Forgiveness program is open to anyone employed by a U.S. federal, state, local, or tribal government organization, as well as those employed by a qualifying non-profit organization. This includes those serving in the military.
To qualify for public service loan forgiveness, a borrower must work full time, have Direct Loans, repay those loans under the 10-year standard repayment plan or an income-driven repayment plan, and make a total of 120 qualified monthly payments. Those 120 payments will take at least 10 years to complete. Once eligibility is confirmed, a borrower's remaining balance will be forgiven.
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Other benefits
On top of loan forgiveness programs, other benefits are available to certain members of the military:
- Interest on student loans obtained prior to military service is capped at 6% during periods of active duty. This applies to both federal and private loans.
- Loan repayment can be postponed during periods of active duty and immediately following active duty.
- Anyone serving in a hostile area that qualifies them for special pay can avoid paying interest for up to 60 months.
- While on active duty, many of the documentation requirements related to student loan benefits are waived.
- In the case of a service-connected disability, student loans may be eligible for discharge.
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Many military student loan forgiveness options
Depending on the branch, those joining or already serving in the military have a wide variety of options to reduce their student loan balances, cut or postpone monthly payments, and have their outstanding principal forgiven. Those who don’t qualify for these programs may still qualify for the Public Service Loan Forgiveness program, which is open to those outside the military as well.
Military student loan forgiveness programs are a win-win for the military and those serving. For the military, the programs are a potent recruitment and retention tool. For members of the armed forces, the financial weight of student loans can be entirely eliminated in some cases, and in other cases, the burden of repayment can be reduced. The money saved could be put into a savings account or even invested.
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