The Loan Repayment Program (LRP) is a special incentive that the Army offers to highly qualified applicants entering the Army. Under the LRP, the Army will repay part of a Soldier's qualifying student loans. Only specified Military Occupational Specialties (MOSs) qualify for the LRP.
Enlisting Active duty Soldiers are eligible for the Loan Repayment Program if they meet the following conditions:
- Soldier must agree to a term of service of three years or more.
- Soldier must decline enrollment in the Montgomery GI Bill in writing, using DD Form 2366.
- Soldier must have LRP guaranteed in writing in the enlistment contract.
- Soldier must be a non-prior service accession.
- Soldier must have a high school diploma and a score of 50 or higher on the Armed Services Vocational Aptitude Battery (ASVAB).
- Soldier must enlist in one of the critical MOSs that qualifies for the program (Local Army recruiters have the current list, which changes quarterly).
- Loans must be made, insured, or guaranteed under the Higher Education Act, Title IV, Part B, D, or E or any loan incurred for educational purposes made by a lender that is (a) an agency or instrumentality of a State; (b) a financial or credit institution (including an insurance company) that is subject to examination and supervision by an agency of the United States or any State; (c) from a pension fund or a non-profit private entity (subject to case-by-case review) and prior to entry on active duty.
The Army will repay 33 1/3 percent of the outstanding principal balance, less taxes of the Soldier's student loans annually or $1,500, whichever is greater, after each year of service (up to $65,000, less taxes) up to three years total. Loans must not be in default before entering active duty, and during the repayment process.
Loans that qualify for repayment:
- Any loan made, insured, or guaranteed under the Federal Family Education Loan Program, part B of title IV of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.);
- Any loan made under the William D. Ford Federal Direct Loan Program, part D of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.);
- Any loan made under Federal Perkins Loans part E of title IV of the Higher Education Act of 1965 (20 U.S.C.1087aa et seq.); or
- Any loan incurred for educational purposes made by a lender that is -
- an agency or instrumentality of a State;
- a financial or credit institution (including an insurance company) that is subject to examination and supervision by an agency of the United States or any State;
- from a pension fund or a non-profit private entity (subject to case-by-case review)
- Parent Loans for Undergraduate Students (PLUS) (only loans incurred for the Soldier's education)
- Supplemental Loans for Students (SLS)
- Stafford Loans
- Perkins Loans
- William D. Ford Loans
There are many loans that do not qualify. Individuals should ensure loans are covered under the Higher Education Act, Title IV, Part B, D, and E or any loan incurred for educational purposes made by a lender for the Soldier prior to signing the enlistment agreement. Listed below are several loans that are not covered under this Act:
- Private Loans
- State Funded Loans
- Institution Loans
- Equity Loans
- Consolidated Loans for someone else (wife, sister, brother, etc)
- Parent Loans incurred for someone other than the LRP participant
- USAA Loans
Payments are made directly to the lender. The first payment is not made until after the member has completed one year of service (assuming all initial entry training has been completed). The Army will only repay the remaining original unpaid principal, less taxes on qualifying loan(s). Interest (even if it has been re-capitalized into principal) will not be repaid. Additionally, payments made under the LRP are considered taxable income in the year(s) that payments are made. Furthermore, there is no reimbursement available for any loan payments already paid. The Army will not pay on loans that are in default.
In order to maintain eligibility for the LRP, Soldiers must remain qualified in their original MOS throughout their initial term of service. If an LRP participant does not fulfill his or her obligated term of service by separating from the service early, then that Soldier will lose his or her eligibility for LRP. There are some exceptions to this early separation rule. For example, individuals who separate early after completing at least one year on active duty, may be eligible for prorated LRP payments if the reason for separation was physical disability, hardship, or certain convenience of the government discharges.