UNDERSTANDING THE DOD STUDENT LOAN REPAYMENT PROGRAM
Obtaining a college education and pursuing your dream job can be quite difficult for many students, as factors such as tuition, books, etc. can be large stressors. Most of the time, students will have to borrow skyrocketing amounts of money that they will have to pay off after graduation. The good news is that there are other ways for service members to pay off their debt, such as via the DoD student loan repayment program. There are two options for service members to pay off their loans: the Student Loan Repayment Program, which is available for active duty members who have an agreement with the organization to serve in specific roles, and the Public Service Loan Forgiveness, for those who work in qualifying public service positions.Further, some branches of the armed forces offer their own plan for loan repayment, which can also be in the form of an incentive. This is their way of retaining personnel. These may vary depending on the branch's needs and specific job roles. The sad truth is that many people are not aware of this wonderful program that the military is offering.
Ways That You Can Pay Student Loans
The SAVE PLAN, or Saving on a Valuable Education, was just rolled out in August 2023. It aims to help civil servants, family members, and, most specifically, service members reduce or eliminate their student loan debt. The program aims to cut undergraduate loan costs in half, from 5% to 10% of their discretionary income. SAVE also guarantees monthly payments for student loans but will be based on their monthly income. Reduced payments will help ease the interest charges, helping borrowers avoid accruing more unpaid interest.Another benefit of SAVE is that some borrowers whose initial principal balances were $12,000 or less will be granted loan forgiveness after making 120 payments. Service members can learn more about this DoD student loan repayment program by contacting a military financial advisor.Another program that service members should be aware of is the Zero Percent Student Loan Interest Relief program. It will exempt military members from settling interest for up to 60 months; however, this is on certain student loans. To take advantage of this benefit, you must log in or create an account with studentaid.gov.Then, you need to provide your loan servicer with any of the following:
- orders from the military showing service in a hostile area
- an earnings statement that shows your hostile fire or imminent danger pay
- a certifying official's signature and statement.
This is also available for Veterans who overpaid the interest on their student loans. They can follow some of the steps and apply for reimbursement.Lastly, civilian employees and service members can avail of the perks of the DoD student loan repayment program via the Public Service Loan Forgiveness. All they need to do is remain in service for at least ten years while continually making 120 qualifying loan payments. When applying for this benefit, make sure the qualifying payment is enough because it is a requirement. As of 2019, the Government Accountability Office reported that around 99% of people are denied this benefit due to the lack of pre-requisite requirements.
What Is the Amount of Repayment?
Since there is a DoD student loan repayment program that you can take advantage of, the amount you will receive will vary, and sometimes it will depend on the result of your application. However, in general, there is up to $65,000 repayment for the Army and Navy, $30,000 for the National Coast Guard, and the National Guard will receive up to $50,000. These amounts may still be limited depending on military specialties. Each year of completed duty, your branch will make payments of $1,500 or 1/3, whichever is greater than the total unpaid principal balance.These payments will still be subject to taxes, and you will receive a separate W-2 Form from DFAS. It is still essential for you to file an income tax since a percentage of your payment will be withheld. The availability of this DoD student loan repayment program is a great help, especially if you are saving some of your monthly salary for future usage.Suggested reads:
- Veteran Debt Assistance - How to Find Legit Resources
- 2024 Veterans Benefits - The Ultimate Guide for Benefits, Applying, and More
- The Veteran's Complete Guide to GI Bill Benefits
Sources:
- SAVE Plan Helps Service Members, Civilians Alike With Student Loan Debt > U.S. Department of Defense > Defense Department News
- FINRED | Zero Percent Student Loan Interest Relief (usalearning.gov)
- Public Service Loan Forgiveness: DOD and Its Personnel Could Benefit from Additional Program Information | U.S. GAO
- Student Loan Repayment Programs | Military.com