Special Student Loan Options Available for Members of the Military

Like so many other former college students, some military members are facing the issue of student loan debt.  Military members have served our nation and as a result are entitled to some special student loan benefits and options from the United States Department of Education and the Department of Defense (DOD).

The Department of Education’s Office of Federal Student Aid has published a guide to help raise awareness of the various benefits and options that exist, especially for the military.  The guide “What You Need to Know About Your Federal Student Loan Benefits” can be found on the Federal Student Aid website at https://studentaid.ed.gov/sa/sites/default/files/military-student-loan-benefits.pdf.  It provides a description and eligibility criteria for benefits available to members of the armed forces.

For example, did you know that the Service Members Civil Relief Act (SCRA) provides for an interest rate cap of 6% on student loans for military members.  The loans must have been disbursed prior to active military service.  And the good news is that this rate cap also applies to any private student loan a borrower may have.  Additionally, members with federal loans are entitled to 0% interest on loans if they are serving in a hostile area that qualifies for special military pay.  And this 0% interest could apply for a period up to 60 months.

In addition, there are special student loan deferments available for members during periods of active duty that are away for a service member’s normal duty station.  This applies active duty service during a war or other military operations and national emergencies.  And members can even postpone repayment of their student loans while if they are preparing to return to school after active duty.

In certain situations, the Department of Defense will repay all, or a portion of, an eligible military members student loans.  This is a special program that varies based on the branch of military service.  Members would need to contact their specific branch’s personnel office for details on the DOD’s student loan repayment program.

If a military member is facing a service-connected disability that causes them to be permanently disabled, they may qualify for a Veterans Total and Permanent Disability Discharge.  Under this program a military borrower’s federal student loans would be discharged and the borrower would not have to repay them.  The Department of Veterans Affairs would need to certify that the member has a service connected disability as a part of the application process for this discharge.

Other military specific benefits are available that could help members pay for college or some career schools and not have to rely on student loans.  This includes military tuition assistance programs for active duty and some reserve component military members.  All military branches offer this benefit that helps to support the pursuit of higher education during a service members off-duty hours.  Each branch has its own procedures for applying for military tuition assistance.  Members should contact their respective military personnel offices for more details.

Additionally, the Department of Veterans Affairs offers VA Educational Benefits, also referred to as GI Bill Education Benefits.  For those members that served during the period after September 11, 2001, there is the Post 9/11 GI Bill which can be used in conjunction with military tuition assistance programs.  This program can be used for up to 15 years after qualifying service, and can actually be transferred to spouses and dependent children of the eligible military member.  Service members and Veterans should contact the Department of Veterans Affairs for the specifics of this educational benefit.

Military members have earned these benefits by nature of their honorable service to our nation and The National Foundation for Credit Counseling has trained and certified student loan counselors who can answer questions about military specific student loan and education benefits.  Please visit studentloanhelp.org to find an NFCC certified student loan counselor that can assist you with your student loan related issues.

About the Author:

Barry Coleman is the Senior Director of the NFCC Student Loan Counseling Program, and Retired CMSgt. U.S. Air Force.

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