While military service itself doesn’t trigger automatic loan forgiveness, it qualifies you for several powerful federal programs that can reduce or eliminate student debt. The most significant of these is the Public Service Loan Forgiveness (PSLF) program.
Your military service is considered qualifying employment for PSLF. To receive forgiveness, you must:
- Work Full-Time for a Qualifying Employer: The U.S. Armed Forces is a qualifying employer.
- Have Eligible Loans: Only Federal Direct Loans are eligible. If you have other federal loans, such as FFEL or Perkins Loans, you may need to combine them into a Direct Student Loan Consolidation Loan.
- Enroll in a Qualifying Repayment Plan: You must make payments under an Income-Driven Repayment (IDR) plan.
- Make 120 Qualifying Payments: After making 120 on-time payments (10 years’ worth) while meeting the above criteria, you can apply to have your remaining loan balance forgiven. These payments do not need to be consecutive.
Other Federal Loan Relief Programs for Service Members
Beyond PSLF, military members and veterans can access other valuable benefits.
Total and Permanent Disability (TPD) Discharge
Veterans who have a 100% service-connected disability rating from the Department of Veterans Affairs (VA) are eligible to have their federal student loans discharged. The Department of Education automatically identifies eligible veterans through data matching with the VA, simplifying the process.
Department of Defense (DoD) Student Loan Repayment Program (SLRP)
This is a recruitment incentive, not a forgiveness program. As part of an enlistment or reenlistment contract, a specific branch of the military may agree to repay a portion of a service member’s student loans. The amounts and eligibility vary significantly by branch and occupation.
Servicemembers Civil Relief Act (SCRA)
The SCRA provides critical financial protections, though it is not a forgiveness program. For loans taken out before you entered active duty, the SCRA caps the interest rate at 6% during your service. This applies to both federal and private student loans and can result in substantial savings.
Key Steps for Military Members
- Identify Your Loans: Log in to StudentAid.gov to see if your loans are federal Direct Loans.
- Certify Your Employment: Submit a PSLF Employment Certification Form (ECF) annually or when you change duty stations. This helps you stay on track and creates an official record of your qualifying payments.
- Request SCRA Benefits: Contact your loan servicer(s) to request the 6% interest rate cap. You will need to provide a copy of your orders.
Frequently Asked Questions
Q: Is military student loan forgiveness taxable?
A: No. Forgiveness received through the Public Service Loan Forgiveness (PSLF) program is not considered taxable income by the federal government. Likewise, a Total and Permanent Disability (TPD) discharge is also not taxable.
Q: Do I have to be in a combat role to qualify?
A: No. Any full-time role in any branch of the U.S. military qualifies as public service for the PSLF program.
Q: What happens if I leave the military before 10 years?
A: The qualifying payments you made during your service will still count toward PSLF. If you take another job with a qualifying public service employer (such as a government agency or 501(c)(3) nonprofit), you can continue making payments toward the required 120.
Authoritative Source:
- U.S. Department of Education: Federal Student Aid for Service Members