The Military Student Loan Forgiveness Programs

The student loan debt crisis hasn’t spared anyone. Even some currently serving military members and veterans have been affected. The general misconception is that individuals who are serving or have previously served in the military have no student loan debt. However, not everyone gets the right information before, during, and after they complete their military term. Hence, it’s important to know your military student loan forgiveness options before you join the military. 

Typically, not every higher education borrower will qualify for loan forgiveness. However, it comes as tremendous assistance if you can find how you meet the criteria for any kind of relief, discharge, or forgiveness program. This is true, especially if you are currently transitioning from military service to civilian life. There are military student loan forgiveness programs that might interest you when you decide to return to school. 

However, these loans come in different shapes and forms with varying eligibility criteria. Therefore, one of your principal focuses is to find the eligibility criteria for these military student loan repayment programs. 

Meeting the Criteria for Military Student Loan Repayment

Through the Forever GI Bill, benefits derived from military student loan forgiveness became accessible to all other forces in the military in 2019. This was great news, especially for younger members of the armed forces. However, older personnel also enjoyed the same benefits through the Montgomery GI Bill and it’s 9/11 counterpart.

Nevertheless, it’s easy to state that the Military College Loan Repayment Program, also known as CLRP offers some of the best loan forgiveness programs for military personnel. Under the program, personnel can obtain as much as $65,000 for student loan forgiveness. You get this amount simply for renewing your service contract or joining the military. 

Military CLRP is one of the most sort after Federal Student Loan Forgiveness provided to personnel in the military. However, those who aren’t eligible for forgiveness programs through the military have a better chance of receiving benefits from the Public Service Loan Forgiveness Program, otherwise called PSLF.  

In this guide, you will find all the information you need to determine if you qualify for CLRP, the mode of application, and the approval processes associated with it. The information here is relevant to each part of the military and covers some essentials of PSLF. 

For those interested in other military-specific forgiveness programs, we’ve covered those too.

Best Loan Repayment and Military Loan Forgiveness Programs

The number of loan forgiveness programs you can enjoy as military personnel can vary greatly. Some of them include the following; 

  • The SCRA or Servicemembers Civil Relief Act 
  • The Military College Loan Repayment Program (CLRP)
  • The NDSLD or National Defense Student Loan Discharge Program 
  • The Public Service Loan Forgiveness Program (PSLF)

For the remainder of this guide, we’ll go into details and cover each of these military student loan forgiveness programs. By the end of this guide, you will know what each program offers, who it’s for, and how to take full advantage of its benefits. 

Remember, if you find yourself asking any questions about any of the programs, you can reach us directly or follow our blog posts for more resources on each program. 

Details to Consider

If there is any honest piece of advice, we can give our readers about student loan forgiveness – it’s that things don’t always work out the way you might have imagined. This is the case, even if you end up qualifying for a military student loan forgiveness program. 

We don’t take this conclusion lightly. Because there are several individuals, who despite qualifying for benefits, go through several challenges while receiving their payment of funds, in some cases, some couldn’t get their payments to the right accounts. While others also ran into all manner of challenges that they never foresaw. Therefore, it’s better that you’re prepared for any eventualities. 

This way, you can better protect yourself from the seemingly inescapable student loan debt crisis if your forgiveness benefit fails to follow through. In this regard, we strongly recommend you look out for alternatives to forgiveness programs. Usually, the struggle with student loan debt needs some expert help too. Many borrowers today look to debt relief agencies for help. 

Why? Because the workers at these agencies make student loans their daily problem. As such, they are best positioned to help you overcome the myriad of challenges keeping you from getting the best alternatives to solve the problem of student loan debt. However, remember to check the track record of these companies to find out if and how they helped students in the past.

Military College Loan Repayment Programs

You can only benefit from CLRP if your answer to either of the following questions is yes: 

  • Have you amassed debts from student loans at the time you were considering joining the military? 
  • Are you joining the Military reserves after active duty? 

If you answered yes, then CLRP might just be right for you. 

Don’t forget that failure to qualify for CLRP isn’t the end of the world. There are several other alternative military student loan forgiveness programs that can benefit you. For instance, you may not meet the criteria of CLRP but meet the requirements for PSLF – an equally favorable forgiveness program if you think about it. For most branches of the military, CLRP is readily available. 

Some of these branches include the Air Force, Army, Coast Guard, National Guard, Navy, and certain branches of the Reserves too. To qualify for benefits through military loan repayments, the following eligibility criteria are the requirements. 

CLRP Eligibility Criteria

To qualify for CLRP, these are the requirements you’ll have to meet. 

  • Hold a valid diploma from a high school (GEDs and other such tests do not meet the eligibility criteria for CLRP)
  • Join the reserves after years of active service or enlist for the first time in the military
  • Made at least 50 marks in the Armed Forces Qualification Test
  • Join a MOS that qualified to participate in CLRP (remember, only positions that have shortages qualify for CLRP benefits)
  • Have a student loan that aligns with the guidelines of the CLRP program

As the requirements indicate, the program doesn’t accommodate everyone because you’ll have to be a new service member, or enlisting in the reserves. For those already in the military and don’t have any plans of leaving the forces anytime soon, the CLRP isn’t for them. 

Nevertheless, you always have the alternative of applying for some of the best student loan forgiveness programs like the Public Service Loan Forgiveness Program. 

Students Loans that Meet CLRP criteria

In case you don’t know, not all the loans at your disposal will qualify you to enjoy the benefits of CLRP under the military student loan forgiveness programs. Often, you’ll find that only a small subset of student loans can qualify for this program. 

Hence, if you plan to be a beneficiary of CLRP, you should aim that your loans be: 

  • Not in default
  • Federal student loans
  • Obtained under the William D. Ford Federal Direct Loan Program
  • Borrowed under the Federal Perkins Loans program
  • Insured, guaranteed or made under the Federal Family Education Loan Program
  • Borrowed to fund education and: 
    • Made by an agency or lender of a state
    • Organized by a credit or financial institution, or an insurance company subject to supervision or examination by an agency of a state of the nation. 
    • Made by a non-profit entity or pension fund

By now, it’s obvious that the number of student loans that qualify for this military student loan forgiveness program isn’t many. It is not uncommon to run into borrowers who believed they qualified. However, it’s usually the case that these individuals failed to pay attention to the details of the requirement and the kind of student loans they need to take to benefit from the CLRP. 

Therefore, the eligibility guidelines are there to help you make the right choice earlier on, before it’s too late. For example, some service personnel with private loan debt keep trying to enlist the services of agencies to help them get on to the CLRP and its benefits. But this is simply impossible. 

Amount of Funds Provided By CLRP

The total amount of funds you’ll receive isn’t fixed. It largely depends on the branch of the military that you decide to enlist. However, there is a cap on the maximum amount any military personnel can receive under this military student loan forgiveness program. This amount is about $65,000. 

Talking about CLRP, the sum of money you are entitled to receive depends partially on your duty-status. Those in active service can receive two times the amount reserve personnel receive. 

Below, you’ll find the breakdown according to status:

  • Reserved enlistees can receive up to 15% forgiveness of their loans. The outstanding principal balance of these enlistee’s loans will be covered for every year of their service.
  • Enlistees in active duty can obtain up to 33.33% to cover the principal outstanding of their loan. This money specifically caters for each year they complete in service. 

However, here is the catch about CLRP benefits; the program doesn’t make all the funds available to you at a go. Rather, you receive a third of the payment to cover your outstanding debt every year. 

Do not forget, however, that the case isn’t ⅓ on year 1; instead, in year 2, it’s 1/3 of the original amount, etc. Hence, each year sees a decline in the amount of money you receive from the military student loan repayment policy. This is explained by the fact that the balance due is ⅓ of the outstanding or remaining student loan debts. 

Bottom Line

These details must be very well understood, because many do not fully understand these calculations. Also, it’s vital not to forget to factor these details into your decision-making process. The fact is, many service personnel neglect these little details and get surprised by its impacts later on. The bottom line, you need to be realistic about your loans, because they won’t disappear in 3 years time simply because you’ve become a beneficiary of CLRP. 

How CLRP Operates for Each Branch

Though all branches of the military enjoy the benefits of CLRP in one way or the other, they all don’t benefit in the same way. This is because the requirements vary from one branch to the other. Also, the lifetime maximums and ways of disbursement differ across various branches. One would ask why these differences. 

However, the vital reality to consider is the fact that certain branches enjoy better benefits than others. On the other hand, there are branches that do not have any benefits whatsoever. Information on these differences is crucial, especially if you plan to continue your education or desire to use a program like the veteran student loan forgiveness to cover your student loan debts later. 

There are entire articles online dedicated to the explanation of these differences. However, this guide will simplify the principle. To learn more, continue reading. 

The Army College Loan Repayment Program

As earlier stated, there are many different packages at the disposal of military personnel who wish to benefit from military student loan forgiveness programs. However, the CLRP to date is regarded as the most beneficial of these packages. You can receive a lifetime student loan forgiveness worth $65000. 

The fund is paid out on a yearly basis. The first payments arrive the moment enlistees complete their first year of qualifying service. This first disbursement is given at 33.33% of the outstanding principal balance of their loan. 

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College Loan Repayment Program for Army Reserves

If you are a member of the army reserves, you can qualify to receive funds for student loan forgiveness as well. Though you won’t get as much as those in active service will receive, the total amount can make a significant difference for many army folks in the reserves. 

Army reserves personnel will usually get 15% of their outstanding principal balance as their annual forgiveness funds. 

The Navy College Loan Repayment Program

Apart from active army personnel and reserves, sailors also enjoy military student loan repayment benefits. The maximum, in this case, is also set at $65000 over the lifetime of the loan provided sailors to meet the requirements of the program. 

Like their army counterparts, sailors are also only capable of receiving CLRP benefits after the completion of their first year of active service. Also, you must have signed up for at least four years of service to enjoy the CLRP benefits as a sailor. 

College Loan Repayment Program for Navy Reserves

Just as CLRP offers some benefits to army reserves, reserve sailors also get some benefits. However, it’s nothing like what their army counterparts receive. Neither is it anything close to what their active-duty counterparts enjoy. For reserve sailors, the maximum benefits they receive is about $10000. Believe it or not, this is the total loan forgiveness fund made available to navy reserves. 

In this case, too, naval personnel only become beneficiaries of the program after completing their first year of service successfully. However, things differ from their active-duty counterparts in the sense that reserves need to sign up for longer service, per the eligibility requirements. To be specific, the minimum length of time you must sign up is six years. 

The College Loan Repayment Program for National Guards

With all the talk of army folks, it’s easy to forget the Guardsmen. However, this lot has been busy these past few years. Particularly because of the U.S’s war in Afghanistan and Iraq. Also, a couple of years ago, the National Guard was rendered eligible to get some substantial financial assistance. 

In the case of the guardsmen, both enlisted National Guards and officers are eligible to obtain up to $50000 as benefits to cover student loan forgiveness. The only thing that complicates the deal in the case of the National Guard is the eligibility criteria. 

The Air Force College Loan Repayment Program

Simply put, airmen don’t get the same treatment their army and naval counterparts receive. Under the CLRP, air force personnel only receive `$10000 as lifetime benefits for military student loan forgiveness. To add to the sting, you’ll have to meet the same criteria as sailors and soldiers if you want to benefit from CLRP as air force personnel. 

Hence, if you decided to enlist in the military simply to enjoy for the benefits you can enjoy in its student loan forgiveness packages (frankly, you couldn’t have a worse reason to enlist), then you’ll be better off joining another branch. The reasons being, quite obvious because you will go through the same stringent requirements yet get very little benefits. 

The Loan Repayment Program for Coast Guards

Come to think of it; the Coast Guards are even better off than the Marines and AirForce, that’s as far as student loan forgiveness programs are concerned. Probably, this is because the Guard receives a large number of graduate enlistees every year. The enlistees who meet the eligibility criteria receive up to $30000 in loan forgiveness. 

Like the AirForce, Army, and Navy loan forgiveness programs, you only receive your first benefits after successfully completing your first year of service. However, unlike the others, there is a limitation that stipulates that beneficiaries can only receive $10000 per year. 

The College Loan Repayment Program for the Marines

To say the Marines were short-changed is an understatement, because things are honestly worse for them. As way back as 2011, no kind of student loan forgiveness or veteran student loan forgiveness program has been available for them. 

When you think of it, it makes some sense. Because the records show that the Marine Corp receives the lowest amount of graduate applicants. Since this is the case, someone must have felt there was no need for a forgiveness plan for the remaining few. But still, this doesn’t make it any fairer. 

Truth be told, the benefits for this military student loan forgiveness program dried up from the time the heavy fighting in Iraq came to a halt. Now, there is no need to enlist large numbers of marines. As such, the benefits also fizzled away. You shouldn’t expect any CLRP benefits for Marines anytime soon. Unless, of course, another major war begins in the not so distant future. Currently, it would be hard to justify any increased enlistment of the Marine Corps in such peaceful times. 

Attention to Interest Accumulation

Earlier in this guide, we mentioned that your “outstanding principal balance” would determine the number of benefits you’ll receive. This implies that the interest on your student loan debt isn’t covered by the military student loan forgiveness programs. The traditional military benefits for student loan forgiveness only address the principal amount you borrowed to cover your education. 

So how does this affect you? Usually, borrowed funds accumulate interests over time. Your traditional student loan debts are no exceptions. The benefits you’ll get from forgiveness programs, even after you’re eligible, will not cover the interests on your loans. These are still your responsibilities, and you’ll have to make full repayment. Mind you; students only become all the more burdened by the compound interest loans generated over time. 

Hence, the fact that you’ve got some money to pay up the principal wouldn’t make much of a difference from a financial standpoint. That’s if you’re unable to pay the interests. It only keeps getting worse with time. Nevertheless, you need not forget that the above-mentioned benefits are worth it. Because you get to keep about $65,000 depending on the force you join. 

So instead of giving up your pursuit of these military student loan forgiveness benefits, you should be looking for alternatives to help make full payments – principal and interest alike. Irrespective of your point of view, you can’t deny the fact that the military loan forgiveness programs can help you save a huge amount of money. That sure makes a lot of difference one way or the other. 

Attention to Taxable Incomes

As if the requirements and eligibility criteria aren’t enough put offs, your standard military loan forgiveness programs have another significant drawback. The funds you receive from the program is part of your annual taxable income. Hence, you will have to report it to the Internal Revenue Service. As a result, you’ll be paying taxes on every penny you receive as benefits from any military student loan forgiveness program. 

When you consider the total sum of taxes you’ll have to pay, it’s a substantial amount. In case you receive $10,000+ for yearly benefits, it’s crucial to include the tax liabilities in the deal ahead of time. The military student loan forgiveness program attracts major tax liabilities. 

Fortunately, the CLRP programs come with a great advantage. They are set up so that beneficiaries don’t receive their benefits in check, or cash. Instead, your student loan lender receives the funds directly from the Federal Government. You may deem this a major drawback. 

However, the government covers your tax liability such that, it withholds 28% of your benefits and sends that directly to the IRS. 

The Math Shows It All

If you do the math and do it well, you’ll realize that it’s a good thing. Why? Let’s face it; paying taxes isn’t easy. You will have to come up with a huge lump sum of money and go through the motion of getting it to the IRS (in reality, many fail to do) at the close of the year. 

Hence, the government is rather doing you a favor by withholding 28% of your benefits. You don’t have to worry about your tax obligations concerning these forgiveness programs anymore. However, we all agree that the entire funds weren’t taxable. 

But still, it’s not like you have to come up with any of the taxes you have to pay by yourself. Imagine having to pay all that cash out of your pocket. In this case, you don’t directly receive anything. Hence, it’s hard to feel like someone took something away from you. 

Nevertheless, these details show a downside. You’re not actually getting `$65000 like you were promised from the forgiveness benefits. Because 28% of $65000 is $18000. This amount goes straight to the IRS instead of your lender. One may even ask, who is the IRS? 

Irrespective of the answer you find for that question, it’s obvious that those who maximize their benefits and receive the full $65000 will only get $46000 to pay off their student loan debts. You can do the math yourself ($65000 – $18000). Still doesn’t change the fact that $46000 is a lot of money. And it certainly makes a difference if you had to pay your student loans out of pocket. 

Other Student Loan Relief Programs to Check Out

It’s vital not to forget that CLRP isn’t the only loan forgiveness programs military personnel can benefit from. Therefore, those who don’t meet the eligibility requirements for CLRP have several other options. Some of them we’ve listed below. 

Hence, this section focuses on the other packages they offer loan forgiveness benefits for military personnel. We will cover the National Defense Student Loan Discharges, PSLF, and the Servicemembers Civil Relief Act. 

At the end of these three, we’ll also cover the general debt relief programs available to just about everyone, military or not. For these programs, you don’t necessarily have to be a military. However, there are other requirements that you’ll have to meet. So continue reading if you want to know all the options at your disposal. 

Public Service Loan Forgiveness Program

The Public Service Loan Forgiveness Program received a major overhauling form ex-president Obama’s student loan reforms. However, the program wasn’t the only one that was affected by this policy change. Putting that aside, the PSLF is one of the major student loan forgiveness programs that makes the most difference for many American student borrowers. Mind you, the better part of the beneficiaries of this program aren’t military personnel. 

However, this doesn’t mean those in the military cannot take advantage of this program too. It presents an amazing opportunity for active servers who plan to stay on in the military for some time. Still, should you decide to separate and move into any kind of public service, the PSLF is also available to you. 

The crucial determinant of whether the PSLF is a good fit for you remains the fact that, you need to make at least 120 full student loan payments. And these payments must have been made on time too. In other words, you need to make about ten years’ worth of payments, and at the same time, there are employment requirements too. You need to be working in a public service position for no less than 30 hours per week. 

Workers that Qualify

If you’re an employee of the government, you are in public service. Hence, everyone working for the Federal government, such as local Government positions, military personnel, non-profit workers, or state government works, falls under this category. 

Bear in mind that occupations like Firefighters, Police, Park Rangers, and other civil agencies of the sort all comprise government positions. Moreover, lots of the guys who leave the military end up in these positions. Hence, chances are, you’ll qualify for PSLF even after you are no longer in active service. 

We need to state one of the final requirements of the PSLF; you must have been enrolled in one of the Income-Based Student Loan Repayment Plans as at the time you made your 120 payments. In today’s terms, this means you must have been enrolled in PAYE (Pay As You Earn Repayment Plan), Income-Contingent Repayment Plan (ICR), or the Income-Based Repayment Plan (IBR). 

In this regard, you may have to do some due diligence, in the form of research. Primarily to determine if the program is actually worth the trouble. Because in the case of some of these Federal loans, you would have finished your payments by the time you’ve made 120 payments. Nevertheless, PSLF is still the best option for federal student loan borrowers who are looking for a forgiveness program, most especially if you make little or no money and have a mountain of student loan debt to pay back. 

Hence, if you believe your chances of remaining in the military for ten years are high, or you plan to find work at a non-profit or government agency, then you want to take the PSLF a little seriously.

The National Defense Student Loan Discharge (NDSLD)

If you took out a National Defense Student Loan to help finance your college education, then you may be in luck. Because some of your total loan repayments may be discharged through benefits from this program. 

Beneficiaries of Perkins loans and National Direct Student Loans can also meet the requirement for this program and obtain some, if not all, their loans canceled. As military personnel who served in the Armed Forces, your military service must, by all means, include no less than a full year in active combat or service at a dangerous war zone. 

If you believe you stand a good chance of getting qualified for the NDSLD, the next step is to apply. All you have to do is to send a copy of your DD214 discharge and attach a motivation letter to it. This letter will explain to the company that serves your loan why you believe you’re a good fit for the discharge program and why you should benefit. 

Generally, the success rate of applications to these programs hasn’t received any reports. Nevertheless, we have reason to believe that some individuals who applied got positive results. Hence, you won’t waste your time pursuing it, provided you meet the eligibility requirements. 

The Servicemembers Civil Relief Act

The servicemembers Civil Relief Act was introduced in 2003 by President Bush. In essence, the program is a late addition to the 1940 Soldiers and Sailors Civil Relief Act (SSCRA). With these two laws, you get a better idea of the benefits available for military personnel who are inactive duty. 

Under these laws, you’ll get a variety of benefits; however, the most relevant of these benefits is the following: 

  • All debts you had prior to enlisting in the military receive a 6% maximum cap on their respective interest rates. 

How do you employ the benefits of SCRA to your advantage? If you have any debts (including student loan debts, of course) that have an interest rate higher than the maximum cap of 6%, before you enlisted for service, then you are entitled to a reduction in that interest rate. 

This certainly works for all kinds of debts like car loans, credit card debts, and mortgages. The SCRA interest rate reduction differs from interest deferment such that it actually forgives student loan borrowers their debts. Instead of simply delaying the inevitable until a later date. For debts you accumulated after joining the military, the SCRA will have nothing to do with them. 

Making a Formal Request

To apply for the benefits of the SCRA to your pre-service debts, contact the servicer of your loans. You need to put your application in writing as a formal request for interest reductio per the SCRA law. Then you provide a copy of your orders too. 

Mind you; you’re only entitled to a reduced interest rate for the duration of your active service in the military. Hence, you will not want to delay your request. Since, a simple interest rate reduction could help you save a significant amount of money. 

Apply for Student Loan Forgiveness Help

If you struggle with university student loan forgiveness, then you should get help with that. Because the employees in these agencies are dealing with the student loans every day and they have enough experience for solving different kinds of student loan problems.

Non-Military Federal Student Loan Relief Programs

Should you still have challenges with student loans even after exploring the military student loan forgiveness programs listed above, then you’ll like this section. Here you’ll find additional financial aid packages made available to people just like you. 

Most of these programs aren’t specifically for military personnel. However, everyone who owes federal student loans can benefit. Some of the main programs are the following:

  • Federal Student Loan Deferment Programs
  • Federal Student Loan Rehabilitation Programs
  • Federal Student Loan Consolidation Programs
  • Federal Student Loan Forbearance Programs

If you have a loan from the federal government, you’ll definitely want to find out more about these options. Especially if you’ve determined that none of the military student loan forgiveness packages will fit your situation.  

Non-Military Federal Student Loan Forgiveness Programs

Don’t forget; you cannot fail to take advantage of your Military student loan forgiveness packages like CLRP and the Public Service Loan Forgiveness Program. However, it’s not everyone who will qualify for these two. Also, there are cases that you receive benefits from these programs but still have outstanding student loan debts. 

Usually, these cases call for particular attention to other forgiveness options. As such, you might want to read more about the following loan forgiveness packages:

Given the variety and number of options, your chances of qualifying for at least one are quite high. Therefore, you might want to take a look at each to determine your chances of receiving the benefits of any of these packages. 

So Your Loans Aren’t in Good Standing

We won’t deny it, most of the military student loan forgiveness programs and other packages offered by the government are only available to borrowers with loans that are in good standing. This implies that your account must be in repayment status because you’ve been making your payments on time. 

However, should the unthinkable happen, and your loans end up in default, delinquency, or worse, you get a wage garnishment, then you’ll need all the resources you can get to help reverse these situations. 

Nevertheless, we hope with this guide, the worse will have been prevented, and you can secure yourself one of the military student loan forgiveness packages. These packages become very relevant once you realize that they can help avoid future incidences of default or delinquency. Even a wage garnishment that can mercilessly eat away at your paycheck can be kept at bay. 

On the other hand, if your loans have already defaulted and you feel you can’t get them back into good standing anytime soon, even with military student loan forgiveness, then you might have only one choice left. In such a case, we highly recommend you think about attempting a Federal bankruptcy discharge.