Student Loan Forgiveness for Military Personnel Explained (2024)

FAQs

Student Loan Forgiveness for Military Personnel Explained? ›

Service to our country qualifies borrowers for one of the most popular student loan forgiveness programs — Public Service Loan Forgiveness. This program forgives all federal student loan debt

Many people are not aware that the Army, Navy, Air Force, and National Guard can offer you special programs for repaying student debt. If you have Federal Direct Loans, you may be eligible to have these loans totally forgiven by joining the military.

In the U.S., approximately 20.3 million people — about 8% of the population — are military veterans or active duty service members. Military service members and veterans are eligible for some educational benefits, such as the G.I. Bill, but they may also be eligible for student loan forgiveness due to their service.

According to the IRS, student loan amounts forgiven under PSLF are not considered income for tax purposes. Learn more about the PSLF process. You won't be taxed by the federal government, but your state may tax you. Any debt forgiven as a result of PSLF won't create a federal tax liability for you.

Unfortunately, there is no current military spouse student loan forgiveness program in existence. While various student loan forgiveness programs are available to service members, these do not extend to military spouse education. However, there are other programs they can explore to ease their financial problems.

While getting an education is vital to making a living, many Americans struggle with paying off student debt. The US military offers programs to help service members repay their student loans. While the military doesn't erase all debts, their financial assistance means a lot to families who aren't well off.

requested: The SCRA interest rate reduction is not automatic for private student loans, so make sure you do your part and properly request it. To do this, contact your student loan servicer to request your reduction – be sure to provide them with a copy of your military orders calling you to active duty.

If your school closes while you're attending or shortly after you graduate, you could qualify for a federal student loan discharge of up to 100%. Qualifying loans include Direct Loans, FFEL Program Loans and Perkins Loans. Cancellation amount: Up to 100%.

TPD 101. If you are totally and permanently disabled, you may qualify for a total and permanent disability (TPD) discharge of your federal student loans or TEACH Grant service obligation. If you receive a TPD discharge, you will no longer be required to repay your loans or complete your TEACH Grant service obligation.

Yes, student veterans can receive financial assistance from the Federal Pell Grant program if they meet certain criteria. The grant provides up to $6,895 for the 2022-2023 school year, though awards vary based on expected family contribution, cost of attendance, and enrollment status.

How does student loan forgiveness work in the Army? ›

Cancellation of loans under the Federal Perkins Loan Program permits Soldiers on active duty in hostile fire or imminent danger pay areas to cancel up to 100% of their Federal Perkins Loans or National Direct Student Loans. This benefit does not apply to Stafford Loans or PLUS Loans.

In summary, the public service loan forgiveness program could be an efficient way to pay off your student loans if you satisfy the requirements needed and have a decent student loan balance. If you are trying for the PSLF program, it is important to communicate with you loan servicer.

A "tax bomb," or in this case a "student loan tax bomb," occurs when a forgiven debt becomes taxable income – meaning the borrower has to pay taxes on that amount. The IRS generally taxes all income sources, including when a creditor cancels, forgives or discharges a debt.

The GI Bill pays 100% of tuition and fees for eligible military spouses and dependents, up to the maximum in-state tuition for public schools, and up to $22,805.34 per academic year for private or foreign schools. But first, you must have benefits transferred from the servicemember to their spouse.

California – A Community Property State

California follows the community property system, meaning that assets and debts acquired during the marriage are typically considered community property (unless a prenuptial agreement states otherwise) and are subject to equal division between spouses.

Under the 2003 Servicemember's Civil Relief Act (SCRA), spouses of active duty service members can get help with their financial obligations if they have burdensome loans that are either in the service member's name or in both spouses' names.

enlistment contract. The Navy will repay up to $10,000 for student loans obtained prior to enlistment. The Navy Reserves also offers the CLRP program.

Non-prior service, initial-term Army Reserve Soldiers on drilling status are eligible for the Loan Repayment Program if they meet the following conditions: Soldier must have Loan Repayment Program guaranteed in writing in the enlistment contract. Soldier must enlist for a minimum of six years.

The highly touted Air Force JAG Corps Student Loan Repayment Program pays eligible JAGs up to $65,000 toward student loan debt. Payments are made directly to a qualified lender over a three-year period, starting after completion of the first year of service as a JAG Officer.

Reserve and National Guard members may be eligible for periods of full-time service as well. Employment at a qualifying tax-exempt not-for-profit 501(c)(3) organization counts also; however, some private not-for-profit organizations are not eligible.