Here in 2023, it is estimated that the United States Army has over 1 million soldiers, counting the Army, Army National Guard (ARNG), and the U.S. Army Reserve (USAR). Many serving our country have pursued higher education, hold college degrees, and unfortunately hold thousands of dollars in outstanding student loan debt.
Thankfully, out brave soldiers are not without options to deal with these student loans. In fact, they have eight distinct student loan forgiveness programs to contemplate.
Army student loan forgiveness
Members of the United States Army have multiple different student loan repayment assistance programs to consider, including:
Army Student Loan Repayment: Active Duty
Army Reserve College Loan Repayment Program
Prior Service Soldier Loan Repayment Program
National Defense Student Loan Discharge
Health Professions Loan Repayment Program
Public Service Loan Forgiveness
Income-Driven Repayment
Perkins Loan Cancellation
1. Army Student Loan Repayment: Active Duty
Highly qualified applicants into the US Army may qualify to have the greater of 1/3 of their qualifying outstanding student debt, or $1,500, forgiven per year for up to three years. The Army Student Loan Repayment program carries a maximum lifetime benefit of $65,000, and can be used to repay the following types of qualifying loans:
Federal Direct (William D. Ford)
Stafford
Perkins
SLS
Parent PLUS (incurred for a soldier's education)
Consolidated
Private student debt does not qualify for this program. To retain eligibility, soldiers will need to meet the following eligibility requirements:
Agree to serve for a minimum of 3 years
Decline to participate in the Montgomery GI Bill, using DD Form 2366
Score at least a 50 on the Armed Forces Qualification Test
Have participation in the program noted in an enlistment contract
Enlist in a critical area of Army need
In the event that you participate, the Army will directly make payments right to your lender.
Pros
There are many benefits to the Army Student Loan Repayment program, highlighted by the potential of becoming student debt free! Additionally, though, you'll also benefit your country by willingly serving in a critical area of need.
Cons
I only recommend this program to those that are willing to make the 3 year commitment, otherwise you may be penalized and have to pay back benefits you received. Clearly, this is a big decision that you must think through before you commit.
This program is also not available to those with loans in default, or else you are ineligible for the program.
Finally, forgiveness granted through the Army Student Loan Repayment Program is considered to be taxable income in the year that the benefits are paid, so you'll want to be prepared for that.
Application process
Once you decide to move forward with the LRP, you'll need to complete an application. Surprisingly, there is not very much information about this process online, but it does mention that you should contact your Primary Action Officer.
Additionally, you can direct any further questions directly to the Army via email at usarmy.usarc.ocar.mbx.education-slrp@army.mil or via phone at 1-800-339-0473.
2. Army Reserve College Loan Repayment Program
The next program to consider is the Army Reserve Loan Repayment Program, which is open to highly qualified applicants entering the Army, more specifically a Military Occupational Specialty (MOS for short).
Sometimes, qualifying MOS's are areas of greatest need at a given time, and the list can change somewhat over time.
The program will pay the greater of 15% of your qualifying remaining balance or $1,500 at the end of each year, up to a lifetime maximum of $20,000 (less taxes).
To qualify, you'll need to be an initial term Reserve Soldier still on drilling status and meet the following requirements:
Enlist and commit to a minimum of six years prior to going on active duty
Hold one or more of the eligible federal loan types (Stafford, Perkins, William D. Ford, Consolidated, Parent Loans for undergrad students)
Score a 50 or higher on the AFQT examination
Enlist in a qualifying MOS
3. Prior Service Soldier Loan Repayment Program
The third Army specific program is reserved for soldiers within the Army Reserve that have previous military experience under their belts.
The Prior Service Soldier Loan Repayment Program awards those with prior service experience with up to $50,000 in student debt assistance.
4. National Defense Student Loan Discharge (NDSLD)
Those that complete at least a full year of service in the Army may gain eligibility for National Defense Student Loan Discharge (NDSLD) if the service occurred in an area designated as hostile fire or imminent danger.
The program is intended to provide forgiveness to those with qualifying Perkins or National Defense Student Loans. The average amount of forgiveness that can be accessed via NDSLD has not been made public.
5. Army Health Professions Loan Repayment Program (HPLRP)
Healthcare professionals such as doctors, dentists, nurses, and others in the Army Reserve or on active duty may be eligible to receive up to $40,000 in student loan assistance per year via the HPLRP program. The program carries a lifetime maximum benefit of $120,000.
You'll receive slightly less than the $40,000 in assistance, since you'll need to account for taxes (HPLRP is taxable).
Army HPLRP eligibility
To be eligible for the U.S. Navy's HPLRP program, you'll need to have qualifying and outstanding student loans (Federal Direct, health professions education loans, etc.). Other eligibility criteria include:
Serving as an officer in the Army Selected Reserve
Hold professional qualifications within a health discipline that the United States Secretary of Defense "has determined to be needed critically in order to meet identified wartime combat medical skill shortages."
6. Public Service Loan Forgiveness
Depending on your loan situation, those in the Army may find it advantageous to participate in civilian loan assistance programs such as Public Service Loan Forgiveness. Under the guidelines of PSLF, you'll gain eligibility to have your Direct Loans forgiven after making 120 qualifying monthly payments on an income-driven repayment plan.
Depending on your income, household size, and other variables, you could actually receive credit for making $0 payments.
Also, specifically for those serving in the United States Armed Forces, the Department of Education released guidance in early 2022 noting that servicemen and women may now receive PSLF credit for time spent on active duty, regardless of whether they actually made payments. This holds true even if your loans were in a deferment or forbearance status.
To get started tracking your status towards PSLF, you'll want to complete the Department of Education's PSLF and TEPSLF Certification & Application Form.
7. Income-Driven Repayment
If, for some reason, you are in the military but do not qualify for any sort of Army specific program or PSLF (unlikely, but possible), you may opt to join one of the Department of Education's income-driven repayment plans.
These plans, which require that you pay 10-20% of your monthly discretionary income for 20-25 years, will reduce your monthly payments, maybe substantially. And while you may incur extra interest expenses by virtue of making extra years of payments, IDR can be a good option for you if you cannot afford to keep up with your payments now.
It just may not be your first pick for an assistance program.
I have prepared a number of income-driven repayment guides to learn more:
8. Perkins Loan Cancellation
Finally, Army members may qualify to utilize Perkins Loan Cancellation, a program that can completely forgive your outstanding Perkins Loans if you meet certain career eligibility requirements.
But there is also a side statute that notes that you may receive 100% Perkins forgiveness if you serve at least a full year of active duty in a designated area of hostility or area of imminent danger,
How to pick a repayment strategy best for you
I am oftentimes asked by readers how best to pick a repayment strategy that works for you. My answer is usually the same too. It depends on a number of factors, but none are as important as the amount of forgiveness/assistance you can receive, as well as the concessions you'll need to make to receive this aid.
Consider income-driven repayment. The long term benefit is that you'll become debt-free! But in this instance, the concession you'll need to make is to spend another 20-25 years in debt to get to this point.
I always advise my clients and readers to complete this pros and cons exercise with all of the potential programs they may be eligible for.
As it pertains to Army specific programs, I especially encourage you to consider the ongoing service requirements that many of the programs carry. By understanding all sides of the equation, you'll be able to find the right program for you and avoid unintended consequences along the way.
Other student loan benefits for Army members
Those demonstrating the courageousness and bravery by serving in the United States Armed Forces also have other benefits available to make their student debt more bearable. Among these benefits are:
Capped interest rates - The Servicemembers Civil Relief Act (SCRA) protects those with higher interest rate debt, capping the interest you can be charged at 6%.
Deferment on active duty - Those with federal debt are eligible for deferment while on Army active duty or certain statuses within the National Guard
Veterans' Total and Permanent Disability (TPD) Discharge - Those that experience disabilities as a result of military service may qualify to have their federal student debt forgiven in its entirety.
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