Military loan forgiveness is offered to active military personnel and their spouses, when their loans have reached their maximum interest rate. This interest rate, often called the “interest-only” loan, lasts for only one year, during which time the monthly payments are frozen at that rate. After the one-year grace period has expired, the interest rate can begin to increase. If you are a military spouse that has reached this time limit, your loan might be eligible for forgiveness. Here’s how to find out.
To apply for military loan forgiveness, you will need to know the name of the lender (such as Bank of America, Chase, or Discover), the contact information for your loan, and your expected repayment date. You also will need to determine if you meet any of the qualifications needed to participate in the loan repayment program. To qualify, you must have been in the military on at least one of the twelve months before beginning your application. You must also have been enlisted or discharged, or be a member of the Selected Reserve.
Military personnel that qualify for the student loan deferment or forbearance programs receive lower monthly payments than they would otherwise receive under normal circumstances. In addition, they do not have to repay the balances until they have completed their assigned service or until the grace period expires. For most military loans, repayment begins once the service period has expired. However, some loans such as the Navy student loan deferment may allow repayment after the full six months of military service.
If you do qualify for this type of program, the repayment terms will be more favorable to you. For most types of federal student loans, the six-month grace period ends once you have become a fully paid veteran. But, you will have to repay the balance of your loan after you become a veteran. As long as you are not in the military or a reserve component, you may be eligible for one year of student loan deferment or forbearance.
Some of the other types of forgiveness include education loan forgiveness, education loan repayment assistance programs and disability tax credit forgiveness. Education loan repayment assistance programs provide a tax break to certain educational expenses. These education loan repayment assistance programs are based on family income and assets. There are some tax incentives for the spouse and children of military personnel who remain at least partially employed. If you are eligible, you can apply.
The disability tax credit is available to disabled veterans and their spouses. The credit is worth ten percent of your monthly payment if you have been approved for the assistance. Certain tax incentives are available for this type of student loan payment. The eligibility requirements vary by each agency, so it is important to review all the options to find out what you qualify for. Just because you qualify for one student loan payment does not mean you will qualify for the others.
Another option available for borrowers is an automatic payment plan. This type of plan allows the borrower to make one low payment each month as long as certain criteria have been met. Examples of such criteria could be that the borrower must have a steady source of income and be actively employed. With automatic payment plans, payments are normally made once a week until the borrower checks out.
Military personnel who are members of the Selected Reserve, active duty or retired military and who are in need of financial assistance might be able to get relief with one of these federal benefits. As part of the Servicemembers Civil Relief Act, the government offers a variety of federal student loan forgiveness programs to qualified borrowers. All eligible applicants can apply, but without a loan check, usually after the completion of the application. This ensures that military veterans will not have to pay for the program if they do not qualify for it.