There are millions of current and retired military service members in America. According to the Department of Defense, there are 1.3 million people active in the armed forces as of 2020 with over 20 million veterans living in the U.S.
If you served in the military, you made an incredible sacrifice for the safety of our country. But despite your hard work and contributions, you may still have student loan debt to worry about — which can cause financial strain for you and your family.
If that’s the case, you may be wondering about your military student loan deferment and forbearance options. Here’s what you need to know about postponing your payments and making them easier to manage.
How does deferment and forbearance work?
With a deferment or forbearance, you can temporarily postpone making payments toward your student loans. Despite not making payments, you won’t become delinquent or enter into default.
With a federal deferment, you may not be responsible for interest that accrues on your loan during the payment postponement. If you have Direct Subsidized Loans or Federal Perkins Loans, the government will cover the interest that accrues, instead.
All federal loan borrowers, including civilians and military service members, are eligible for loan deferments or forbearance. Depending on your circumstances, you could qualify for an economic hardship deferment or unemployment deferment and postpone your payments for up to three years. Or, you could be eligible for a general forbearance, where you stop making payments for 12 months at a time.
Military student loan deferment and forbearance options
As a military service member, you may be eligible for special deferment and forbearance options.
Federal student loans
Federal student loan borrowers may qualify for military service and post-active duty student deferment. Under this program, you can postpone your payments if you are on active duty in connection with a war, military operation, or national emergency.
Or, you can qualify for deferments after active duty. This deferment ends when you resume enrollment in college at least half-time or 13 months after completing active duty service, whichever occurs first.
During your deferment, you don’t have to make payments on your loan. Interest on Direct Subsidized Loans and Perkins loans will not accrue, but interest will accrue on other types of loans.
To apply, complete and submit the military service or post-active duty deferment form to your loan servicer.
Federal loan deferments, including military loan deferments, do not apply to private student loans. However, some private student loan lenders offer deferments to military service members who are currently deployed or in active service.
To find out if your lender offers deferments for military service members or veterans, contact the lender’s customer service department or review your promissory note.
Military student loan repayment options for current and retired service members
While postponing your loan payments can give you time to get back on your feet, loan deferments aren’t always the best strategy, especially if you don’t have Subsidized Loans and interest accrues on your debt. If that’s the case, consider these other military loan repayment options.
1. Total and Permanent Disability Discharge
If you’re a military veteran with federal student loans with a service-connected disability that is permanent and totally disabling, you may be able to have your loans eliminated through Total and Permanent Disability Discharge. Through this program, your loans are completely forgiven. You can apply for Total and Permanent Disability Discharge online.
2. Public Service Loan Forgiveness
If you were part of the military for at least ten years and have federal loans, you could qualify for loan forgiveness through Public Service Loan Forgiveness (PSLF). Under PSLF, you are eligible for military student loan forgiveness if you work full-time for a non-profit organization or government agency — including military service — for ten years while making 120 monthly payments.
If you’re not sure if your loans or employment qualify, use the PSLF Help tool to find out.
3. Income-driven repayment plans
If you have federal student loans and can’t afford your current monthly payments, consider applying for an income-driven repayment (IDR) plan. There are four different plans:
- Income-Based Repayment
- Income-Contingent Repayment
- Pay As You Earn
- Revised Pay As You Earn
Depending on which plan you qualify for, your loan servicer will extend your loan term to 20 to 25 years and cap your monthly payment at a percentage of your discretionary income. Because your payment is based on your income and family size, some people qualify for a payment as low as $0.
You can apply for IDR plan online.
4. Student loan refinancing
If you have private student loans, you’re ineligible for federal programs like military deferments, IDR plans, loan discharge, and PSLF. If you have private education loans — or if you are ineligible for those other programs based on your income or employment — another option for managing your debt is student loan refinancing.
With refinancing, you take out a loan from a private lender to pay off all your existing student loans. Moving forward, you have just one loan and one easy payment. You also have completely different loan terms, including a fresh interest rate and monthly payment.
Student loan refinancing has some significant advantages:
- You can save money: If you have good credit or access to a co-signer with good credit, you can qualify for a refinancing loan with a lower interest rate than you have on your existing loans. Over the life of your loan, that lower rate can help you save thousands of dollars.
- You can pay off your debt sooner: If you qualify for a lower interest rate, more of your minimum monthly payment will chip away at the principal instead of the interest. If you continue making the same payment that you had before refinancing, you can pay off your loan months or years earlier than originally scheduled.
- You can reduce your monthly payment: When you refinance, you can choose a loan term that works for you. If you can’t afford your current payments, you can opt for a longer loan term. In fact, some lenders offer loan terms as long as 20 years. With a longer term, you can dramatically reduce your monthly payment.
Repaying your student loans
As a military service member, there may be times when you need help managing your loans. While a deferment or forbearance can allow you to postpone your payments for a period of time, there are other ways to get longer-term relief.
If you think that student loan refinancing sounds like the right approach for you, use Purefy’s Compare Rates tool to get quotes from top refinancing lenders easily and quickly — all in one place.