Managing debt while on active duty

  • Published
  • By Capt. Jonathan D. Wohlwend
  • 66th Air Base Group Staff Judge Advocate
Active duty service members are eligible to have interest rates lowered to six percent on student loans, both federal and private, that were acquired prior to a member's active-duty service.

Members are required to notify the student loan servicer in order to receive the lower interest rate under the Servicemembers Civil Relief Act. In order to qualify, those interested are required to contact the servicer and provide a copy of the orders.

Eligible members may submit the request up to 180 days after leaving active duty service, and the lower interest rate will be applied retroactively for the entire military service period.

Lower Monthly Payments

Service members can take steps to lower their student loan monthly payment through the Public Service Loan Forgiveness program following 120 qualifying monthly payments. All active duty members who meet the time in service and qualifying payments requirements are eligible. To begin, eligible members need to have qualifying loans, sign up for a qualifying payment plan and certify public service employment. Only Federal Direct Loans are qualifying loans for the Public Service Loan Forgiveness program.

Contact the student loan servicer to get the Employment Certification for Public Service Loan Forgiveness form to qualify for this program. Those eligible are required to have the 66th Force Support Squadron Military Personnel Section complete and sign section three of the certification.

In addition, some may qualify for Income Based Repayment. This program sets a low monthly payment based on income, allowing service members to make progress toward 120 on-time qualifying payments and loan forgiveness.

Reduce Interest Rate to Zero

When serving in an "area of hostility" that qualifies members for special combat pay, service members may not have to pay interest on Direct Loans made on or after October 1, 2008, for up to 60 months. To learn more, contact the loan's provider for qualification.

Military Deferment

Many loan servicers offer a form of military deferment on student loans. Be cautious of military deferment programs. Military deferment may be available for some service members while on active duty or in the National Guard during certain qualifying times. But be aware, for those with an unsubsidized loan, the unpaid interest will cause the total debt to grow.

For further information on the Service members Civil Relief Act and how it relates to student loan debt, contact the 66th Air Base Group Legal office at 781-225-1410 to schedule an appointment with an attorney.