If you’re a service member or veteran with student loan debt, you need to be aware of some major options to get relief before it potentially expires later this year.
Student loan forgiveness program options specifically tailored to veterans are lacking. The programs available to everyone, regardless of their service, are often better than those geared toward service members.
That’s because student loan repayment programs for the military often provide a very limited benefit. In some cases, the benefit even counts as taxable income.
If you’re still on active duty, you should consider whether your branch offers a College Loan Repayment Program benefit. This can provide up to $65,000 toward student loans.
However, I’d like to highlight some additional options you may not be aware of.
Public Service Loan Forgiveness waiver
Through Oct. 31, the Department of Education will count all prior payments and military deferment toward the Public Service Loan Forgiveness (PSLF) program.
To obtain this benefit, you need to consolidate at Federal Student Aid website, and then you need to apply at studentaid.gov/pslf by listing all of your employment history. You will want to get signatures to verify your service.
Veterans with more than 10 years of credit can get all of their loans discharged tax free due to this program.
And if you fall short of the 10 years needed, you can get a considerable additional amount of credit and possibly work longer in a nonprofit or government job to complete the 10-year requirement.
Income-driven repayment waiver
In April 2022, the Biden administration announced an Income-Driven Repayment waiver (IDR).
This program allows many kinds of forbearances and payments to count toward loan forgiveness programs beyond the PSLF, which is limited to public servants who have served or plan to serve for 10 years full time.
Older borrowers with many years of payments can possibly get their loans forgiven entirely if they have been in repayment for 20 years or more.
VA disability student loan discharge
The government has started matching borrower records with veterans with who have a 100% disability rating to forgive their student loans.
If you are permanently disabled or have a 100% disability rating, contact your servicer to see if you can qualify for this discharge, as it would be tax-free.
Beware of scams targeting veterans
Veterans have long been the target of scams and schemes designed to separate you from your money.
Know that student loan companies will rarely call you. If anyone calls you promising you “Biden student loan forgiveness” or hyping a limited time benefit, beware and contact your servicer.
RELATED: National Guard expands ‘generous’ state education benefits
Sometimes it’s true that there’s a limited-time benefit, such as with the PSLF waiver above, which expires Oct. 31.
Most companies that reach out to you about student loans want to charge you a four-figure fee to consolidate, which does not provide you with a plan and might not even help you.
When in doubt, contact your servicer and ask if they called you or emailed you. If they didn’t, don’t respond to companies saying they can help you get student loan forgiveness.
Sometimes pay back your loans, but sometimes do not
One of the biggest misconceptions about student loan debt is that it’s like any other debt. It is not.
Some advice you might read suggests paying off your balance in full. That might make sense for some people, but it does not make sense if you plan to work for 10 years in public service.
Over 100,000 borrowers have received PSLF in the past year alone, largely due to the extensive waiver of program requirements during the pandemic.
Realize that sometimes you need to pay back your student loans, but other times you will want to make yourself aware of the many different loan forgiveness programs that can help you get your student loans wiped away.
Furthermore, Congress passed the American Rescue Plan, which eliminates all taxes on student loan discharge and forgiveness from now until the end of 2025.
Help to figure out your student loans
While you should start with contacting your servicer about the opportunities listed above, you can also reach out to our team at Student Loan Planner to get professional help from one of our CFP® or CSLP® professionals.
Veterans deserve more but get left holding the bag when it comes to student loan debt. Do your homework and get help if you think you need it.
This article was written by Travis Hornsby, AFC.
