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Federal Student Loan Repayment Options For Members Of The Military

Student Loans And Military MembersMembers of the military get certain protections when it comes to federal student loans.

Over the years I’ve represented a number of people in the Armed Forces. Two things that blow my mind are how little they get paid to serve our country, and how many of them are burdened with student loans.

Student loans are bad enough for people working for a living, but when it comes to the military it’s often a case of juggling finances to keep the federal student loans up to date.

Thankfully, the government has some ways to make it easier to bear the burden.

Deferring Federal Student Loans While On Active Duty

If you’re called to active duty (or performing National Guard duty) during a war, military operation, or national emergency then you may be eligible to defer federal student loan payments.

Your deferment begins at the time of mobilization and continues for up to 180 days following qualifying service.

If you took out your student loans – private or federal – before you entered the military or were called to active duty, the Servicemembers Civil Relief Act limits the interest rate on your loans to 6% during your active duty military service.

In addition, if you have a Direct Loans first disbursed on or after Oct. 1, 2008 then no interest will accrue on your Direct Loans for up to 60 months of active duty or while performing qualifying National Guard duty during a war, other military operation, or national emergency and are serving in an area of hostilities qualifying for special pay.

If You’re Enrolled In School When You’re Called To Active Duty

Under the College Cost Reduction and Access Act (CCRAA), if you’re a member of the National Guard, Armed Forces Reserve, or the Armed Forces in retired status, you are eligible for a 13 month period of deferment on repayment of your Perkins loans following the completion of your active duty military service.

This deferent applies only if you were enrolled in a postsecondary school at the time of, or within six months prior to, your activation.

Public Service Loan Forgiveness

Under the Public Service Loan Forgiveness Program you can have your federal student loans completely wiped out if you have:

  1. made 120 regular payments on your federal student loans;
  2. while employed full-time by the U.S. Military or by certain other types of employers.

Payment Plans And Consolidation

Consolidation of your federal student loans may lower your payments due.

In addition, you should look into the possibility of extended repayment options, income-based repayment, and other ways of bringing the payments in line with your income.

See Also:

What About Private Student Loans?

Remember that the Servicemembers Civil Relief Act limits the interest rate on private student loans to 6% during your active duty military service.

Unfortunately, there are no other formal programs to help you. That said, some lenders may be in a position to work with you on payments during your active duty period.

See Also:

Look Into Options And Maximize Your Protection

If you’re serving the country, the last thing you should be worried about are your student loan problems.

Your loved ones, your finances and your professional responsibilities come before anything else.

Looking into your options will help keep you out of trouble with your student loans. You serve your country; always remember to serve yourself as well.

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By |October 24th, 2013|

About the Author:

I've been a consumer protection lawyer since 1995, working to help people end their bill problems. I'm a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.
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