The military can assist with student loan repayment, but most programs are for loans from or guaranteed by the government.
If you are looking for assistance, your loan also has to be current or in deferment or forbearance. If you have fallen behind on your loan, then you will need to catch up on payments. The military can’t help with a defaulted loan.
You might not even be able to join the military because bad debt is considered a security risk.
You may have a government loan or guarantee even if it is serviced by a private corporation. You can verify your loan type through the National Student Loan Data System.
One option for any loan is the Service Members Civil Relief Act, which reduces the interest rate to 6 percent. This program is best for private loans.
Your first option for a government loan is deferment. This is available the day you start military training.
Payments are postponed during active duty and for up to 180 days afterward. Interest may continue to accrue, but you can resume payments anytime.
Your second option is Income-Based Repayment (IBR). If your loan payments are more than 15 percent of your income, then you can have them reduced.
The loan term may be extended, but some of the balance may be forgiven if you have a flawless payment record.
“Consider IBR as
soon as you join.”
Public Service Loan Forgiveness
The next program is Public Service Loan Forgiveness (PSLF). This federal program applies to employment with any government or nonprofit agency.
Some private employers might qualify in emergency management, public safety, law enforcement or public education.
It can be any type of job with a qualifying organization, even if you are cleaning toilets at your old high school. There are plenty of PLSF options and you do not have to join the military to take advantage of these options.
Here’s how PLSF works:
When you have made 120 monthly payments, then the remaining balance is forgiven. You do not even have to stay in the military. You could leave the service to reach 120 months at another organization.
Once you reach 120 payments (if that takes 10 years or longer), the balance can be forgiven.
IBR and PSLF can save you thousands of dollars. The military doesn’t pay off those loans, but you have a steady paycheck with programs to reduce your payments and forgive the remaining balance.
As long as you’re in the military, continue with IBR and report your eligibility toward PSLF.
Should you join the military?
These programs look great when you are facing years of debt, but should you join the military?
Serving your country takes motivation and commitment. The military helps you gain amazing skills and realize your potential, but do not sign up just to get rid of your student debt.
Once you are in uniform, you will need more than a debt repayment incentive to keep you going.
Join the military to be part of an incredible team and achieve more than you ever thought possible.
Doug is authoring a three-week featured series with BadCredit.org on military finances. Join Doug next week as he answers more military financial questions.
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