Student loan debt can be a financial burden to the point where you feel there is no way out except to default on your loans. And if you want a job in national security, defaulting on debt is never the answer. Not only that, letting any of your debt go into default can have lasting effects on your life especially when there are better ways to manage that debt without defaulting. There are different ways to handle student loan debt depending on whether you’re in the military or a veteran.
While Serving in the Military
If you currently have student loan debt, then joining the military can help you pay off that debt in several ways:
1. Army or National Guard
New Army enlistees with no prior military service qualify for the Army Student Loan Repayment Program. The National Guard has its own Student Loan repayment Program also.
2. Army Reserve Enlistment
Enlisting in the Army Reserve could qualify you for the Army Reserve College Loan Repayment Program dependent on choosing one of many critical Military Occupational Specialties (MOSs).
3. Army or Navy Healthcare Professional
If joining the Army or Navy as a healthcare professional, you could qualify for the Health Professional Loan Repayment Program4.
4. Air Force Judge Advocate General’s Corp
If joining the Air Force Judge Advocate General’s Corp, up to $65,000 in student loans could be paid off over the term of your enlistment.
5. Navy
Joining the Navy could result in a $65,000 loan reduction.
6. Perkins Loan and Specific Service
Having a Perkins Loan and serving in a hostile fire or imminent danger pay area for longer than a year can qualify you for up to a 50% loan forgiveness provided your active-duty service ended before August 14, 2008; ending on or after August 14, 2008 and up to 100% of your loan can be forgiven.
After Getting Out of the military
Depending on your income after separating from military service, you may qualify for one of four options in the income-driven repayment plan: REPAY, PAYE, IBR, and ICR. Additionally, there are other options out there that you can pursue in order to get that loan forgiven or paid off faster.
1. REPAYE
Under the Revised Pay As You Earn repayment plan, the payment amount is generally 10% of your discretionary income. If all your loans were taken out as an undergraduate, the loan is paid off in 20 years; for loans taken out while in graduate or professional level programs, the time is increased to 25 years.
2. PAYE
Under the Pay As You Earn repayment plan, the payment is generally fixed at 10% of your discretionary income. But it will never exceed more than the standard 10-year Standard Repayment Plan amount. Payback time is fixed at 20 years.
3. IBR
Under the Income Based repayment plan, the amount you pay depends on the date the loan was taken out and if you were a new borrower at the time or not. For new borrowers taking a loan out on or after July 1, 2014, the payment amount is generally 10% of discretionary income, but to not exceed the 10-year Standard Repayment Plan amount. The loan is considered paid after 20 years as a new borrower with a loan date on or after July 1, 2014, and 25 years for subsequent loans made on or after the same date.
4. ICR
For the Income-Contingent repayment plan, the payback period is 25 years with the payment amount fixed at 20% of your discretionary income or what you would pay on a repayment plan with a fixed payment over the course of 12-year adjusted plan according to your income.
Note: Under the Standard Repayment Plan, the fixed payment amount is at least $50 per month for up to 10 years for all loan types, except Direct and FFEL Consolidation Loans. With these types of loans, the payback period varies according to the amount of the loan.
At the bottom of the scale, with amounts up to $7,500, the payback period is 10 years; with amounts of $60,000 or more, the payback period increases to 30 years. Loan amounts in between vary from payback periods of 12 years up to 25 years depending on the loan amount.
5. Public Service Loan Forgiveness Program
If working at a public interest job at a nonprofit, government or civilian position for the military for at least 30 hours per week, a loan can be forgiven after 120 monthly payments.
6. Teacher Loan Forgiveness
One creative option if you have the right degree and a heart to make a difference is to teach full-time for five years in a low-income school. That choice can get up to $17,500 in student loans may be forgiven, but it might not put you on the right path for a national security job. Note, benefits under both the Public Service and Teacher Loan Forgiveness programs may not be used at the same time.
There are many different programs available to both serving members and veterans that can help reduce outstanding student loan debt. Search out which program may be right for you.
