In recognition of Veteran’s Day this week, here is an overview of federal student loan benefits for military service members and vets. Please keep in mind that the benefits outlined below apply only to federal student loans. Whether private student loans have similar benefits will depend on the individual lender.
Military Service Deferment and Forbearance. If you remember, deferments and forbearance allow student loan borrowers to postpone payments on their student loans under certain circumstances. For federal student loans, there is a special deferment option for service members on active duty during a war or military operation. The borrower may request this deferment directly, or can have a representative do it on their behalf. Unlike most other deferments, there is no time limit on active military deferments, as long as the borrower is on active duty. In addition, there is a “post-active duty” forbearance available for borrowers returning from active duty if they were enrolled in school at the time that they were called. These borrowers may continue to postpone their payments for up to 13 months.
Income-Based Repayment (“IBR”). Military service members and civilian employees, regardless of their duty status, should be eligible for IBR, which caps payments at a percentage of income, regardless of the total amount of federal student loan debt. Read more on IBR.
Loan Forgiveness and Cancellation. The federal government offers loan forgiveness to borrowers of Direct federal loans on standard or income-sensitive repayment plans (including IBR) after 10 years of payments, if they work in public service. Since the military is part of the U.S. government, any employee (a service member regardless of duty status, and any civilian employee of the armed forces) should be eligible for this loan forgiveness program. Read more on public service loan forgiveness. In addition, Federal Perkins loans can be canceled following certain types of military service; read more on Perkins loans.
Post 9/11 GI Bill. This bill provides for financial support to returning active duty military service personnel who go back to school. In order to qualify, students must be pursuing an approved program of education as defined in the law. Monetary benefits can include tuition (although it cannot exceed the maximum tuition for in-state undergraduate students in the state where the student is enrolled), as well as room/board, books, and supplies. In certain situations, these benefits may be transferred to the service member’s spouse and one or more children. Benefits vary depending on the length of the service member’s time in active duty, with a minimum of 90 days required for partial benefits.
Other Federal Student Loan Relief Options. There are various other benefits afforded to active military service members involved in a war or military operation. These include:
- Extension of loan grace periods for up to three years
- Extension of deferment and forbearance time limits (for non-military deferments)
- Caps on interest accrual for Direct federal student loans while on active duty
- Cessation of collections activities for defaulted federal student loans