We can't cover the dozens of things someone would need to square away before deploying on active military service. However, we can simplify the ones involving your student loans.
Here are seven key things to know about your loans, education costs, and military service.
1. You May Receive Special Postponement Options
If you need to, you can apply for a military deferment to put your payments on hold until you get back from certain periods of active duty. You can also defer payments for 180 days—or, in some cases, up to 13 months if you were enrolled in college when you were called to serve—after you demobilize.
Interest will build up on unsubsidized loans you have, even during a deferment. So, it's generally best to make payments if you can. If you need to make smaller payments, look into one of the income-driven repayment plans, such as income-based repayment (IBR) or Revised Pay As You Earn (REPAYE). Your IBR or REPAYE payments may be low enough for you to manage during this time; eligible payments can be as little as $0.
2. Your Grace Period May Be Extended
You may extend your grace period if your loan enters its grace period or is already in its grace period while you are deployed. The maximum extension is 3 years. You can request this extension from your loan holder.
3. You Can Reduce Your Interest Rate
Thanks to the Servicemembers Civil Relief Act (SCRA), you have several ways to reduce the interest rate on your loans while you're on active duty. For Direct student loans disbursed as of October 1, 2008, you can request a 0% interest rate for up to 60 months. (If you have Federal Family Education Loan Program loans disbursed as of that date, you will need to consolidate them into the Direct Loan program to qualify.)
As of August 14, 2008, you can also have interest rates reduced to 6% for other types of debt (including private student loans and credit cards). This includes the calculation of fees, including collection costs and default fees, but not for insurance fees. For loans to qualify, they must have been disbursed before your deployment.
Your loan holders proactively apply this benefit for you by checking the Defense Manpower Data Center (DMDC) managed by the Department of Defense periodically throughout the year. If you are not receiving the interest rate reduction, the information in the DMDC may be incomplete, inaccurate, or not monitoring your eligible service. You may apply for the interest rate reduction using this form with your military order information. An authorized official from your military branch will need to certify it.
4. You Can Appoint Someone To Manage Your Loan Accounts
During your deployment, you might not have much time to do paperwork—or to wait on hold during normal business hours. So, you may find it useful to appoint someone you trust to manage your finances while you're away.
You can do this by writing what's called a Letter of Authorization, which permits a person to have access to a specific account, or by giving them more access with a Power of Attorney. In both cases, you'll want to detail how long the authorization lasts, what it authorizes, and what it does not.
The legal assistance office on your military base may assist with composing a Letter of Authorization or establishing a Power of Attorney.
5. You Can Get Educational Assistance During And After You Return (Your Family Can Too!)
Servicemembers, veterans, and their families thinking about furthering their education may take advantage of education assistance programs like military tuition assistance and the GI Bill to help cover your education costs. You and your family members are also eligible to pay in-state tuition rates at public colleges when you are on active duty in the state that you are stationed for at least 30 days.
Visit gibill.va.gov or call 888.GI.Bill.1 (888.442.4551) for more information.
6. Loan Forgiveness, Repayment, And Discharge
U.S. military service is an eligible occupation for the Public Service Loan Forgiveness (PSLF) program. After 120 eligible payments in the Direct Loan program after October 1, 2007, and 10 years, any remaining balance would be forgiven. You can consolidate to become eligible, but only payments on the Consolidation loan will count.
The Department of Defense (DOD) Student Loan Repayment Programs may pay off a portion or all of your student loans. Check with your respective military branch to determine your eligibility and how much your repayment amount may be.
If you suffered a service-connected disability that prevents you from working, you may be eligible to have your federal student loans discharged as well.
7. HEROES Act Waivers
Many of the documentation requirements for student loan benefits are waived if you are on active duty. For example, if you are on a repayment plan based on your income and your military service prevents you from providing updated information on your family size and income, you can request to keep the same monthly payment amount for up to 3 years.
If you're eligible for more than one of these benefits, double-check with the program administrators to make sure that you can take advantage of multiple programs at once. You should also check out our eBook The Military Smartbook For Defeating Student Debt to learn more about other education benefits for military servicemembers, veterans, and their families.
- Download the official Department of Education guide to military student loan benefits.
- Education finance group NCHER maintains another list of resources for military servicemembers at their website.
Thank you for serving!