Did you know that an average student in the US has nearly $25,000 in debt? The total student debt in the country has skyrocketed to more than $1.6 trillion, affecting millions of Americans. Many individuals struggle with paying their student loans for various reasons. Likewise, military spouses are affected by this financial burden.
Military spouses face various challenges. They often have to reestablish themselves in new communities because of their partners’ deployment orders. They have to look for new employment opportunities, good childcare facilities, and provide other necessities. Unfortunately, there is no current military spouse student loan forgiveness program in existence.
While various student loan forgiveness programs are available to service members, these do not extend to military spouse education. However, there are other programs they can explore to ease their financial problems. This blog explores the various options they can consider concerning their student loan debts.
- 1 Student Loan Debt: Are There Military Spouses Student Loan Forgiveness Programs?
- 2 Federal Student Loan Forgiveness Programs
- 3 Other Ways To Refinance Your Student Loans
- 4 State-Specific Student Loan Forgiveness Initiatives
- 5 Conclusion
- 6 FAQs
Student Loan Debt: Are There Military Spouses Student Loan Forgiveness Programs?
Many Americans struggle with student loan debt, which builds up over time and can be very difficult to pay. Fortunately, loan forgiveness programs can help military families eliminate student debt. However, they only apply to active service members and not their military spouses.
While military spouses are not qualified for public service loan forgiveness programs, they can still enjoy various advantages. These include the Servicemembers Civil Relief Act, which provides protections and benefits to eligible military spouses. They can also explore conventional federal forgiveness programs to help manage their monthly expenses.
Federal Student Loan Forgiveness Programs
Partners of military members can look into several federal student loan debt programs. Each program has its own set of requirements for eligibility. While they may not completely lift the financial burdens, they can help manage expenses in the long run. Select programs are available to people from particular professions only.
Public Service Loan Forgiveness (PSLF)
The Public Service Loan Forgiveness program is a federal program that encourages individuals to enter certain career paths. This program helps people working for a qualifying employer eliminate their student loan debt.
There is an extensive list of qualified employers, including government organizations at any level and non-profit organizations. Military service is included under the umbrella of government institutions.
To qualify for this program, a person must have deposited 120 monthly payments with a qualified payment plan. This equates to 10 years of payment while working for the government or a qualified non-profit organization.
The PSLF has undergone temporary changes because of the COVID-19 pandemic, including the following:
- All federal student loans were put into interest-free forbearance from March 2020, with no payments due until October 2023.
- The Department of Education issued a limited waiver of sometimes-onerous provisions for counting payments. While a one-year waiver designated for PSLF expired on October 2022, a similar income-driven repayment account adjustment extends until 2024.
If you have a considerable amount of student debt, the PLSF can save you tens of thousands of dollars. This program can help eligible individuals knock off years or even decades off their repayment timeline.
All Federal direct loans qualify for the PLSF, with the exception of the Federal Family Education Loans (FFEL) and Federal Perkins loans. However, if you consolidate these exempted loans into a Direct Consolidation loan, they might become eligible. However, private loans are not qualified for this program.
IDR Loan Forgiveness
But what if you don’t qualify for the PSLF? You can still get military spouse student loan forgiveness through Income-Driven Repayment (IDR) Plans. IDR refers to the four student loan repayment options based on a percentage of your income.
- Revised Pay As You Earn Repayment Plan (REPAYE Plan)
- Pay As You Earn Repayment Plan (PAYE Plan)
- Income-Based Repayment Plan (IBR Plan)
- Income-Contingent Repayment Plan (ICR Plan)
Depending on your chosen plan, you can potentially have a remaining balance of 20 or 25 years forgiven. This program also sets a cap on loan payments as a small percentage of your income, generally 10% to 20%.
Unlike PSLF, qualified individuals must pay taxes on the forgiven loan amount with IDR forgiveness for military spouses. However, you will have a few decades to plan and save for the tax payment.
Military spouses with loan payments should consider consolidating their loans before December 31, 2023, to take advantage of this program.
National Health Service Corps Loan Repayment Program
This program recruits health professionals to work in selected areas with shortages of healthcare experts. In return, the program helps them repay their qualifying educational loans. Besides loan forgiveness for military spouses, this program also offers individuals a competitive salary and the opportunity to help the local community.
Military spouses can enlist in this program if they’re amenable to moving to other areas. However, this program only applies to health professionals.
Teacher Loan Forgiveness
If the military spouse is an educator, they can consider applying for the Teacher Loan Forgiveness program. This program is open to full-time teachers who have completed five consecutive years in a low-income school or educational service agency.
If you meet the program’s qualifications, you are entitled to forgiveness of up to $17,500 on your Direct Subsidized and Unsubsidized Loans and your Subsidized and Unsubsidized Federal Stafford Loans. Other qualified teachers can receive up to $5,000 in forgiveness benefits.
Nurse Corps Loan Repayment Program
This program covers up to 85% of unpaid nursing education debt for registered nurses (NRs), advanced practice registered nurses (APRNs), and nurse faculty. If a military spouse receives this award, they must work in a critical shortage facility (CSF) or an eligible nursing school as a nurse faculty.
The Nurse Corps Loan Repayment program is available for military spouses who work as nurses. To qualify for this program, they must work in designated areas for at least two years. This program is feasible for military spouses if they can move to work.
Other Ways To Refinance Your Student Loans
There are other initiatives military spouses can explore to lower the amount they pay for student loan debt. While these programs may not completely forgive the debt, they can still help military families.
Servicemembers Civil Relief Act
The Servicemembers Civil Relief Act has six main benefits and protections outlined by the Department of Justice. It is formerly called the Soldiers and Sailors Civil Relief Act.
- The six percent interest rate cap: This cap applies to individuals who enter military service and their spouses. During an active duty service member’s period of service and one year after, the interest on certain financial obligations incurred before military service may not exceed six percent per year. While this can apply to student loans, it is different from public service loan forgiveness.
- Protections against default judgments: Suppose the defendant in a civil judicial proceeding is an active duty service member. In that case, a default judgment may not be entered against them until an attorney has been appointed to represent the service member’s interests.
- Non-judicial foreclosures: During a service member’s period of active duty service and one year after, a creditor cannot complete non-judicial foreclosure proceedings. The creditor must get a court order to foreclose.
- Installment contracts and repossessions: If a service member has made at least one installment payment or placed a deposit on a vehicle, it cannot be repossessed during the borrower’s period of military service.
- Residential lease terminations: This benefit is available to individuals in active duty military service that have received permanent change of station orders or deployment orders for at least 90 days. As a result, it can also be used during a service member’s period of active duty.
- Enforcement of storage liens: During an individual’s period of active duty military service and 90 days after that, a person holding a lien on their property may not enforce it.
The SCRA allows military spouses to lower the interest rate on their loans to a maximum of 6%. However, this interest rate cap extends only to student loans before the service member enters active duty. Technically, this program does not offer student loan forgiveness. However, it does lower their monthly payments.
Student Loan Refinancing
Student loan refinancing is when a person applies for a new loan to repay their current student loans. This method allows people to lower their interest rates or extend payment timelines. Refinancing is available only to private lenders. This is vital information if the military spouse currently has federal student loans. This option means losing federal protections like specialized repayment plans and potential loan forgiveness.
Transferring Post-9/11 GI Bill Benefits To A Spouse
The Post-9/11 Bill allows Armed Forces individuals to pass unused education benefits to immediate family members, including military spouses. The service member must have rendered at least six years and commit to service for four more years to transfer their benefits. Moreover, the person receiving benefits must be enrolled in the Defense Enrollment Eligibility Reporting System (DEERS).
State-Specific Student Loan Forgiveness Initiatives
The state where the military spouse is based may offer student loan forgiveness initiatives. Each loan forgiveness program has its criteria for eligibility. Most of these programs stipulate that an individual must be a US citizen, have outstanding student debt, and actively work in a required profession. Some programs may be exclusively available to certain occupations and require them to work somewhere for a few years.
There is currently no educational financial aid program designated for military spouses. However, this may change soon. In 2021, the Military Spouse Student Loan Deferment Act was introduced in Congress. Once enacted into law, this law may greatly help the partners of military members. Nevertheless, various loan forgiveness programs are available that can be helpful to military families.
Since student loans can be a huge financial burden to families, military spouses must pay them on time. In doing so, they can lower their debt amount and pave the way to financial stability. Explore Servicemembers Civil Relief Act Centralized Verification Service to learn more about military laws.
Will the military pay off my student loans?
The military has several programs that help service members pay their student loans. However, there is no designated military spouse student loan forgiveness program yet.
Are private student loans eligible for forgiveness?
Unfortunately, most student loan forgiveness programs are available for federal loans only. However, private loans usually have better rates and lower monthly payment requirements.
Do active duty military have to pay student loans?
Yes, active-duty military members still have to pay student loans. However, the SCRA lowers its annual interest rate to 6%. This program reduces their bills significantly.