Student Loan Forgiveness For Veterans

Servicemembers Civil Relief Act Interest Rate Cap

A 2008 law known as the Higher Education Opportunity Act amended existing rules to include federally guaranteed student loans as a protected debt under the SCRA. Before 2008, federal student loans were not included as part of SCRA protections.

That means any Direct Loan prior to 2008 is not covered. But for those with student loans originated after the passage of the Higher Education Opportunity Act, those loans have an interest rate cap at 6% for the duration of military service. All interest above and beyond that six percent must be forgiven.

The catch is that this cap is not automatic. It must be applied for in writing and supporting documentation must be submitted including military orders to show the duration of service, etc.

The cap is not for any time except for the duration of military service any interest paid prior to that is not covered under SCRA.

Army College Loan Repayment

Highly-qualified candidates entering the Army may be eligible for the Army College Loan Repayment Program. Under this program, the Army will repay up to 33.3% of the outstanding principal balance or $1,500 whichever is greater each year for up to three years. The award maximum is $65,000.

For more information, visit the Army College Loan Repayment Program website.

Changes In The Program

In 2018, Congress changed the max you could receive with the VA EDRP. Before the change, the most you could get was $120,000 cumulatively over five years.

But the annual limit was increased from $24,000 to $40,000 per year. This means participants can now receive up to $200,000 for a five-year period with this VA student loan repayment program.

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Thank You For Your Service Link

As Americas servicemen and servicewomen, youve always been there for us when we needed you. The Department of Education and your student loan servicers appreciate the sacrifices you make for our country and we want to be there for you, too. Our teams of dedicated customer care representatives can help you access benefits available on your loans, review repayment options, and help you create a plan to manage your student loans while you are far from home.

Some Veterans Are Getting Their Loans Canceled But Others Report Being Mired In Red Tape

Jodie Parks works full time as an occupational therapist at a Michigan state psychiatric hospital. But since October, she has had a second job: spending four hours a week, she estimates, making calls and chasing down paperwork to prove that she previously served in the military.

She needs that proof to have her student loans forgiven under the federal governments Public Service Loan Forgiveness program, created by a 2007 law that pledged to erase students debt if they took lower-paying but critical jobs with nonprofits and the government.

Its a promise that, for most borrowers, has yet to pay off. Less than 2 percent of applicants were approved between 2017, when the first borrowers became eligible, and the onset of the coronavirus pandemic. And among the huge number of applications denied or lost in the bureaucracy were many from Americans who perform perhaps the ultimate public service: joining the armed forces.

Im another veteran whos been told that theres a service for veterans, and then when you try to get through the red tape, its too hard, said Parks, who was in the Air Force from 2009 to 2015 and then earned a degree in occupational therapy. So you just kind of give up.

Thousands of dollars are in play. About half the active-duty service members who have federal student loans have balances of more than $13,000, according to the GAO.

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Student Loan Forgiveness Draws Comparisons To Military’s Gi Bill

As President Joe Biden on Wednesday announced a relief plan to forgive the outstanding federal student loan debt for some borrowers, a non-profit for veterans compared loan forgiveness to the military’s GI Bill.

“I grew up in poverty in the mountains of NC. I ate out of a garden, lived in government housing, shopped at yard sales. I joined the Air Force. Earned my GI BILL. I attained 4 degrees and created my own version of the American Dream. I am not responsible for your student debt,” Code of Vets tweeted on Tuesday.

The GI Bill was passed in 1944 to help eligible veterans and their families get money to cover some or all of school costs, according to the U.S. Department of Veteran Affairs. The bill’s benefits help pay for college, graduate school and training programs.

Biden announced on Wednesday that those who have student loans and earn less than $125,000 a year are eligible to receive $20,000 in student loan forgiveness if they obtained Pell Grants, while those who make less than $125,000 a year and didn’t receive a Pell Grant will be eligible for $10,000 in loan forgiveness.

In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023.I’ll have more details this afternoon.

President Biden

What Qualifies For Veteran Student Loan Forgiveness

Veteran Student Loan Forgiveness

The Total and Permanent Disability discharge program, also known as the disabled veteran student loan forgiveness pogram, relieves eligible veterans from having to repay a William D. Ford Federal Direct Loan Program loan, Federal Family Education Loan Program loan, and/or Federal Perkins Loan Program loan or complete a TEACH Grant service obligation on the basis of a total and permanent disability rating.

Eligibleveterans must complete a TPD discharge application and send it, along with anyrequired documentation of your eligibility for discharge, to Nelnet, the TPDdischarge servicer.

The TPD discharge application applies to ALL your federal student loans and/or TEACH Grant service obligations.

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Types Of Student Loan Forgiveness And Related Options

There are many programs allowing military members to apply to defer student loans or have them forgiven. In all cases, it will be necessary to contact the loan servicer to determine what application requirements are needed at the time.

State law, lender requirements and other rules may apply. None of the programs listed here are automatic. You must apply for each one individually and supporting documentation is a condition of acceptance into each program.

Student Loan Forgiveness For Veterans

October 19, 2020 by Emma Woods

If you are an active duty service member, Reserve, National Guard, or honorably discharged Veteran, you qualify for student loan forgiveness.

All branches of the United States Armed Forces Army, Navy, Air Force, Marines, and Coast Guard can apply for loan forgiveness and repayment programs.

In some cases, you may even qualify for discharge of your loans.

There are a variety of programs available to service members and Veterans, and their criteria and award amounts vary considerably.

Below we go through some of the options that may be available to you and how to apply for them.

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Total Forgiveness Of Student Loans For Disabled Veterans

In a related matter, the Department of Education also recently announced that it will be forgiving the student loans worth $5.8 billion to more than 323,000 totally disabled borrowers. This includes veterans receiving disability benefits from the Department of Veterans Affairs as well as those receiving disability benefits from the Social Security Administration.

Again, a data sharing agreement between the Department of Education and other government agencies will allow this loan forgiveness to be automatically applied.

The loan forgiveness should be automatically applied to all eligible loans. Contact your lender for more information.

Disabled Veteran Student Loan Forgiveness: Top 3 Reasons Why Veterans Should Apply

I hope you enjoy reading this blog post.

If you want to learn how to implement these strategies to get the VA benefits you deserve, to speak with a VA claim expert for free.

The new Disabled Veteran Student Loan Forgiveness Program discharges the Federal Student Loan Debt of veterans who are Totally and Permanently Disabled with a 100% P& T VA RatingOR have a 100 percent Total Disability Individual Unemployability status.

Its officially called the Total and Permanent Disability discharge program, and has been a huge success to date.

And guess what else veterans?

A little known fact is that if youre a veteran with a 100 percent scheduler VA disability rating , youre also eligible for Disabled Veteran Student Loan Forgiveness!

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If Your Loans Are In Default Will Next Year’s Tax Return Be Garnished

Normally, if you have federal student loans in default , your tax refunds can be taken to help cover the balance owed. Since federal student loans were on pause during the 2022 tax season, your federal tax refund was not eligible to be garnished by the government.

It’s unclear if this will remain in place for 2023, though with the new payment pause set to expire at the end of 2022, this benefit may expire.

Your Tax Filing Status Can Affect Your Student Loan Payments

If you’re repaying federal student loans and you’re on an income-driven repayment plan, your marriage status may impact your payment amount. For instance, if you’re married filing jointly, your payments are based on the joint income between you and your spouse. If you’re married filing separately, your payments are based on only your income.

If you decide to file separately to lower your monthly IDR plan payment, however, you may miss out on other key tax benefits. For example, you may not be able to take advantage of a lower tax rate extended to married couples filing jointly, nor will you be able to claim increased credit and deduction amounts available if you filing jointly.

The Revised Pay As You Earn, or REPAYE, plan doesn’t distinguish between whether you’re listed as married filing separately or married filing jointly. Your payments are based on the income of both you and your spouse.

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Important Things To Know About The Loan Discharge Process

There are a few important things to know about the federal student loan debt discharge program. For example, there is a three-year post-discharge monitoring period.

You will be required to repay your discharged loan if any of the following events occur:

• Your annual earnings from employment exceed poverty guidelines
• You take out a new federal student loan under a direct loan program or TEACH grant
• You receive another disbursement from the direct loan program or TEACH grant, and you havent returned the disbursement in 120 days
• You receive a notice from SSA stating you are no longer disabled

Another important thing to know is that loan discharges can receive different tax treatment:

• received before Jan 1, 2018, the discharge may be considered income for federal tax purposes
• received from Jan 1, 2018, to Dec 31, 2025, the discharge wont be considered income for federal tax purposes

You should contact a tax professional if you are worried about the tax implications of forgiving your student loans. There are important things to know about the loan discharge process, so be sure to read all the information carefully before you apply.

You can also get help from a veterans representative if you need assistance completing your application.

Consider Private Student Loans

If you have any funding gaps left over, private student loans could help cover the rest of your education expenses.

If you have excellent credit, you might even qualify for a lower interest rate on private student loans compared to federal student loans particularly Direct PLUS Loans. Because of this, its a good idea to check your private student loan rates to see what you might qualify for.

Also keep in mind that depending on your credit, you might need a cosigner who has good credit to qualify for a private student loan.

Tip:Servicemembers Civil Relief Act

The Servicemembers Civil Relief Act provides financial and legal protection to military members and their families.

The benefits from the SCRA include lower interest rates from creditors, eviction prevention, life insurance coverage protection, and more.

If you decide to take out a college loan, be sure to consider as many lenders as possible to find the right loan for you. Some lenders also provide special military benefits.

Credible makes it easy to compare multiple lenders you can see your rates from our partner lenders in the table below in two minutes.

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Student Loan Deferments After Active Duty

Military members may apply to defer Federal loans and certain private loans following departure from active duty when returning to school. You will need to contact your lender to see what application requirements apply. But in general you will need a copy of military orders, discharge paperwork, and a written statement from a commander or personnel officer.

If Student Debt Relief Goes Through Will You Owe More In Taxes

Borrowers in several states could owe hundreds or even thousands at tax time.

Currently, millions of student loan borrowers are waiting to see how the US Supreme Court will rule on widespread federal loan relief. But if debt relief does go through, will you be stuck with a tax bill in 2023?

The chances are unlikely as 2022 draws to a close. But if forgiveness passes in early 2023, you may be on the hook for state or local taxes on this forgiven debt in 2024. You won’t owe federal taxes on any forgiven student debt through 2025, however, thanks to a provision tucked into the $1.9 trillion American Rescue Act COVID relief package.

Whether you receive forgiveness through the federal student loan cancellation plan, Public Service Loan Forgiveness or another program, your tax liability is the same. Here’s everything you need to know about how your student loans affect your tax bill. We’ll also share some tax deductions to help lower your tax bill or boost your refund next year.

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Servicemembers Civil Relief Act

The SCRA interest-rate cap is available for federal and private student loans, for both borrowers and cosigners. Interest on student loans obtained PRIOR to your active duty military service is limited to 6% during periods of active duty.

You won’t be assessed fees or any other charges while taking advantage of this benefit.

This benefit applies to loans that were obtained prior to active-duty service. It is important to know the earliest benefit effective date for federal loans is August 14, 2008, and active duty periods that fall on or after that date may qualify. SCRA benefits have always been available for Private Loans.

Application of Benefit

Navient proactively checks the U.S. Department of Defense Manpower Data Center , and will automatically apply the benefit to your eligible loans.

If the military active duty periods are different or the benefit is not applied to your loans, please submit valid military documentation.

The fastest way to request SCRA is to and go to Tools & Requests. Or you can .

If Youre Seeking Relief For Your Private Loans Mccarthy Law Can Help

If you have a private student loan, we may be able to help. Under our student loan debt settlement program at McCarthy Law, an attorney contacts your student loan lenders and begins a negotiation process to significantly reduce the interest and principal on your private loans. At the end of a successful student loan settlement, the borrower ends up paying only a fraction of the original balance claimed by the lender. The rest of the debt is forgiven by the lender and the settlement is a full and final settlement of the debt, leaving the borrower without the burden of student loan debt going forward.

Start by giving our offices a call and telling us about your unique situation during a free phone consultation. Well outline your options and provide you with a concrete and strategic plan of action.

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Check Your Credit Report

If you received loan forgiveness due to your service-connected disability, your credit report should not state that you still owe the debt. Other borrowers who receive a disability discharge are monitored for three years by the Department of Education. But if you received a discharge based on VA documentation, you dont have to worry about this step and your credit report should show that you no longer owe the loan, not that it was assigned to government for monitoring. And remember, you can check your credit report for free.

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> > Click HERE to View the TPD Discharge Program Frequently Asked Questions < <

According to Trumps executive order, only half or 25,000 of the approximately 50,000 totally and permanently disabled veterans who currently qualify for the discharge of their Federal student loan debt have received the benefits provided to them by the Higher Education Act of 1965, as amended.

But why did only 50% of eligible disabled veterans apply for VA student loan forgiveness?

Well, to be frank, the old process was confusing and frustrating, and prevented many disabled veterans from receiving the student loan debt relief for which they were entitled to by law.

The good news is that the new and improved disabled veteran student loan forgiveness program is super easy, intuitive to submit and get approved, and eligible disabled veterans can even apply online at the link below:

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