Student Loan Repayment Programs

Are you worried about paying off student loans? With the cost of a college education on the rise, many students and recent college graduates are finding themselves overwhelmed by debt. The Armed Forces can help you manage your college debt with special loan repayment programs for qualified students. Many people are not aware that the military can offer you special programs for repaying student debt. 

As always, check with your recruiter for details.

Eligibility for Student Loan Repayment Programs

To be eligible for the student loan repayment program you must:

  • Sign up for an original (first) active-duty enlistment of at least 3 years with a qualifying specialty, or contract as an Officer candidate
  • If enlisting in the National Guard, you must enlist for at least 6 years
  • Have a qualifying ASVAB score.
  • Have a student loan that is not in default. The loan must have been made prior to entry on active duty.

Only certain loans qualify, currently this includes:

  • Stafford Student Loans (GSLs)
  • Perkins Loans
  • Federally Insured Student Loans (FISLs)
  • Supplemental Loans for Students (SLSs)
  • Parents Loans for Undergraduate Students (PLUS loans)
  • Consolidated Loan Program Loans

How Much of My Student Loan Will the Military Repay?

Currently, the Army and Navy will repay up to $65,000 of your student loans, the Air Force will repay up to $10,000; the Coast Guard will repay up to $30,000 and the National Guard will repay up to $50,000. Remember that these are maximum amounts and may be limited only to very specific military specialties. In the case of the Air Force and Coast Guard, there are yearly limits.

After each completed year of active duty your service branch will make a payment of 1/3 or $1,500 (whichever is greater) on the total remaining original unpaid principal balance. They make the payment directly to the loan servicer.

Payments are subject to taxes in the year it is paid. DFAS will send you a W-2 Form separate from the W-2 Form received for military pay. A percentage of the payment will be withheld; therefore, it is important that you file income taxes with this W-2. Since payments are considered income, this withholding will deter a large tax bill at the end of the year. In general you will receive a refund from the IRS.

FOR EXAMPLE: $2,500 would be withheld from a $10,000. Potentially, you could get all the money back from the IRS and use the refund to make a payment on your student loans.

Student Loan Repayment and The GI Bill

The current regulations say you cannot get the GI Bill if you sign up for the Student Loan Repayment Program. If you signed up for a 3 year contract to qualify for Student Loan Repayment, you will have to reenlist for at least 3 more years to be eligible for the GI Bill.

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