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Military Student Loan Forgiveness and Discharge Programs

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More and more at GetOutOfDebt.org we are getting questions about how to get your student loans eliminated, forgiven, or discharged if you are in or served in the military.

It is absurdly ironic that members of the military can go into harm’s way, fight in combat and yet return home only to struggle to escape the invisible bondage of student loan debt.

However, there are some real options that can help you do this, but like the military, there are rules to follow and hoops to jump through.

Public Service Loan Forgiveness Program

One overlooked program is the Public Service Loan Forgiveness Program. Under this program members of the military that have been employed by the military or a qualifying public service job for the last ten years may have their federal student loans FULLY discharged.

Public service qualifying occupations include:

  • Emergency management,
  • Military service,
  • Public safety,
  • Law enforcement,
  • Public interest law services,
  • Early childhood education (including licensed or regulated childcare, Head Start, and state-funded pre-kindergarten),
  • Public service for individuals with disabilities and the elderly,
  • Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations),
  • Public education,
  • Public library services, and
  • School library or other school-based services.

You need to be employed in these position at least full-time, which is considered to be at least 30 hours a week or what the employer considers to be full-time.

The benefit of this program is it allows you to discharge your debt after it has been consolidated for a low payment.

The way the program works is that after making 120 monthly and on-time consolidated and reduced payments you remaining balance will be forgiven. – (Source: Public Student Loan Forgiveness Program Questions and Answers)

Not all student loans are eligible for consolidation. Private student loans are excluded.

Direct Loan payments that qualify include:

  • The Income Based Repayment (IBR) Plan;
  • The Income Contingent Repayment (ICR) Plan;
  • The Standard Repayment Plan, with a 10-year repayment period; and
  • Any other Direct Loan repayment plan, but only payments that are at least equal to the monthly payment amount that would have been paid under the Standard Repayment Plan with a 10-year repayment period may be counted toward the required 120 monthly payments. (February 3, 2010)

And you may actually be able to have zero dollar loan payments count towards your required 120 payments. If you qualify for a zero monthly payment under the Income Based Repayment or Income Contingent Repayment programs then those payments, or lack thereof, will actually count. Pretty cool, huh?

National Defense Student Loan Discharge

If you helped to pay for college with a National Defense Student Loan it may be partially discharged.

Recipients of a National Direct Student Loan and Perkins Loan may receive partial cancellation of their loan for their service in the United States Armed Forces if his/her military service was for a full year in a hostile fire/imminent danger pay area.

If you believe that you may qualify for cancellation of your loan(s) due to your military service as described above, you should send a copy of your DD214 (discharge form) and letter of explanation to the agency servicing your loan.

This article was contributed by GetOutOfDebt.org, a site that provides free debt consolidation help and debt relief advice for people looking for answers.

Image: jamescollins, via Flickr.com

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  • Alice Clark

    Thank you Steve Rhode, for helping to support and illuminate student loan forgiveness. As you know, student loans that are not dischargeable in bankruptcy can be crippling when life has not worked out according to plan. I recently listened to the You tube video that you and your wife made about your personal bankruptcy (thank you!) and could relate to all of it, except that my illness and reversal of fortune has had no relief because I managed to pay every debt except my federal student loan. So here I am at age 55, single, a defaulted student loan, underemployed, no insurance, health problems, a whole life of just squeaking by, thanks to a next to worthless law degree that I obtained when I was young. The organizations Forgive Student Loan Debt and Aging with Student Loan Debt are full of people just like myself who are still fighting to get out from under these crushing debts. We need a way out of default that does not include paying loansharking collection agencies several hundred dollars a month for a year. We need repayment terms that don’t punish us for being unemployed. We do not seek to shirk responsibility, only for restoration of the same right to bankruptcy that every other debtor (except certain felons and child support evaders) has a right to do in this society in order to get back on our feet. Please look for pending legislation to restore bankruptcy protection to student loans and help us support that, as well. When we talk about student loan forgiveness, we talk not only about the possibility of wiping out student loan debt to stimulate the economy and, in the alternative, bankruptcy relief for those who have experienced a complete financial crisis, but we also talk about the myriad of ways that government and private industry can help citizens who are shackled with student loan debt that capitalizes and compounds the interest at a rate so high it often mushrooms into a debt that just can’t be paid off. We can do this by setting up forgiveness programs in many jobs and disciplines, and by allowing private industry to get a tax credit for offering student loan repayment to employees. Please continue to help publicize the inflated cost of higher education, the lack of consumer protections and fair interest rates on student loans, and the commodification that has created a whole highly profitable student loan industry on the backs of people like myself who were just trying to better ourselves and get good jobs by taking out student loans.

  • Karen

    Thank you Alice, well said. Steve Rhode: Please have your readers make their voice heard on restoring bankruptcy to student loans on this Whitehouse.gov peitition:

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