How to save on your repayments or put them on hold while you’re on active duty.
Student loans can work a little differently for former and current members of the armed forces. When it comes to paying back your loans, you often have more forgiveness, deferment and even refinancing options than civilians.
How does student loan repayment work for service members?
Paying off your student loans while you’re a member of the armed forces works a lot like it does for anyone else. Each month, you make a payment that goes toward your student loan balance and interest.
The main difference is that you have more forgiveness and assistance options than your typical civilian. Lenders are typically more flexible when you’re deployed to an active military zone — most let you defer your loan and go into forbearance and if not, you can refinance with a lender that does. Your lender also can’t charge you more than 6% interest during that time.
Military student loan forgiveness programs
These student loan forgiveness programs are designed to help current and former members of the armed forces reduce their student debt load. However, you typically need to spend at least a few years paying off your student loans to qualify.
Student loan deferment options for service members
Student loan deferment is when you put your loan repayments on hold. Interest still adds up while your loans are deferred, but you won’t be on the hook for repayment.
Almost all student loan providers offer deferment if you’re on active duty — especially if you’re putting your life at risk. Deferment depends on whether you have federal or private student loans. Other types of deferment that aren’t specifically for service members but you may consider are in-school deferment and hardship deferment.
How student loan deferment and forbearance work
Deferment options and benefits for federal loans
Service members might be eligible for the following deferment options on federal loans. Both require you to fill out and submit the Military Service and Post-Active Duty Student Deferment Request form.
- Military Service Deferment. If you’re called to active duty during wartime, a military operation or national emergency, you can apply to have your loans deferred until six months after your service is over.
- Post-Active Duty Deferment. Service members that need additional time getting their finances together after an eligible military service can apply to have their deferment extended to 13 months after their active-duty service is over or when they re-enroll in school.
Deferment options for private student loans
Your options with private lenders tend to vary. Most have a version of military service deferment, though what type of active duty is eligible depends on your lender. Some only allow you to defer your loan if you’re going to fight in a war, while others might also include military operations or national emergencies.
How long you’re able to defer your loan also depends on the lender. Some have caps on how much total deferment you can qualify for, while others allow you to defer your loans as long as your active duty lasts. Reach out to your loan servicer to find out about your specific military deferment options.
Federal protections for loans while you’re on active duty
The Servicemembers Civil Relief Act (SCRA) provides protections to members of the armed forces while on active duty. Most notably, it forbids lenders from charging more than 6% interest on most types of credit — including student loans. The 6% cap also includes most fees.
This only applies to loans taken out before your active-duty military service. Some federal loans like Direct loans and FFEL loans taken out before August 14, 2008 are ineligible. To qualify for the 6% interest rate cap, you must submit a request in writing to your lender within 180 days of finishing your active-duty military service.
Student loan refinancing for members of the military
Qualifying for forgiveness and repayment assistance can take a few years. If you have private student loans and recently got a pay raise or improved your credit score, consider refinancing your student loans for a more competitive rate. In other words, taking out a new loan to pay off your current student debt.
Think twice about refinancing federal loans, however: You’ll lose access to several repayment and forgiveness programs like PSLF and CLRP if you refinance your loan with a private lender. Plus, federal loans tend to come with some of the most competitive rates out there — so you may not save.
Compare student loan refinancing providers
Should I refinance my student loan as a service member?
Consider refinancing if …
- You have private student loans.
- You aren’t eligible for PSFL or CLRP.
- Your income or credit score has increased recently.
- You want to take a cosigner off your loan.
Consider holding off if …
- You only have federal loans.
- You’re eligible for federal forgiveness programs.
- You might be called for active duty.
- Your credit score or income hasn’t increased recently.
Service members have lots of options when it comes to student loan repayment assistance. Many programs come directly through the military, so start by talking to your military personnel officer or representative. Or, check out our guide to student loans to learn more about your options.
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