Do You Pay Student Loans After Joining The Military
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Do You Pay Student Loans After Joining The Military:

Joining the Military? Here’s what you need to know about Student Loans

Have you ever wondered if you have to pay your loans while serving in the military? This deserves a lot of consideration because federal student loans differ from other forms of debt. For example, credit cards and car loans are paid directly by the borrower out of pocket. Read on and find out.

However, with federally backed agencies like the Department of Education or any colleges, schools, or universities that offer federal student aid – things are not always as they seem.

All federally backed educational institutions, such as colleges and universities, have to abide by certain terms and conditions set forth both by law and their agreements with all funding sources, whether they be banks or other associates who may partner with them through various programs. So without further ado:


How Do I Repay My Loans While in the Military?

To receive your GI Bill money, you need to be officially discharged from active duty. If you haven’t reached that point yet, there are some things you can do in order not to default on your loans. The first step is contacting your lender and letting them know that you’re going into military service and when it will end.

This way they’ll suspend all activity on your account while they wait for a discharge certificate, which comes after service ends. The other step is preparing a budget so that after discharge, you can immediately start paying back what you owe.

Most lenders offer an interest-free grace period of up to 180 days after leaving school or being discharged from active duty.

During that time, focus on getting organized and building up savings to cover loan payments once they begin. To learn more about repaying student loans while serving in the military, check out our guide here.

It covers everything from different repayment options to ways to save money and tips for making sure your loans don’t go into default.


Does my Active Duty Status Affect My Repayment Terms?

When you join, you’ll be in what’s called a period of obligated service. Your period of service will last for at least three years—or 34 months—but can be as long as six years depending on your job and position.

During that time, you’ll serve as an active duty member of a uniformed service, with access to all its perks (military health care benefits, VA loans), but also subject to some specific obligations (like deployment and drilling).

Just because you’re in a period of obligated service doesn’t mean your loan payments aren’t still due—you’ll simply get some additional flexibility with them. For example, if you take out a loan before joining, it may be eligible for an interest-free deferment during your period of service.

And if you took out a federal student loan after July 1st, 2006, and didn’t complete school or dropped below half-time enrollment within two years of leaving school (without having completed at least 6 credits per term) or didn’t make required payments within 120 days after leaving school, it may also qualify for cancelation or forgiveness under Public Service Loan Forgiveness Program.


How Are My Payments Affected If I’m On Active Duty Or On Reserves?


For those who are on Active Duty, you may choose to continue making payments on your student loans while serving or opt-out and have payments deferred until you’re released from active duty status.

When deferment periods end, payments must resume immediately. Those who are serving in the Reserves have a different option: during active duty service, they can request a deferment of their loans for up to 3 years.

But once that three-year period is over, they’ll need to make arrangements with their lenders if they haven’t returned home yet and still want a break on their loan obligations.

If you’re in debt, it might be tempting to take advantage of these options—but keep in mind that interest will continue to accrue on all federal loans, even if you aren’t paying them back.

And although federal loans offer many protections for borrowers, there are no options available specifically for military members. There are also certain rules about how much time you can spend outside of the country before having to reenter; check with your lender for details about these restrictions.


Can I Switch Repayment Plans While In School Or Between Terms Of Active Duty?

If you’re still in school, serving on active duty, or on your first 90 days of military leave, you can switch plans if it better fits your situation.

Make sure you know all of your options before switching—some have fees, and not all borrowers are eligible for income-driven repayment (IDR).

In most cases, if you’re not a new borrower as of July 1, 2014, IDR is available to those with loans from federal direct loan programs: William D. Ford Federal Direct Loan (Direct Loan) Program; Federal Family Education Loan (FFEL) Program; and Perkins Loan Program.

To see if you qualify, visit studentaid.ed.gov/ibr. If you don’t qualify for IDR, look into Income Contingent Repayment (ICR), which has payments capped at 20 percent of discretionary income. ICR also requires monthly payments that do not exceed what would be paid under a 10-year standard repayment plan.

It also offers loan forgiveness after 25 years of qualifying payments or at any time if you become totally and permanently disabled. If none of these apply to you, consider an extended repayment plan that will stretch out your payments over up to 25 years but keep them fixed so they don’t increase each year as other plans do.

Keep in mind that these options may result in more interest paid over time than other plans because they extend out your payment period.


What Happens if I Discharge Early from Active Duty?

If you join a regular education loan, you can generally make interest-only payments while on active duty and once you’re discharged. You’ll need to apply for an interest-only payment plan with your lender. Depending on your situation, they may require a certification of service.

Be sure to stay on top of paying off those loans post-discharge! If you have other federal student loans, you might be able to defer or suspend them while in active duty status. But as always, check with your lender before doing so!

And remember—not all jobs will offer loan repayment help; many require that you serve at least 20 years, and even then there are limitations in place as far as how much they will pay each month. Check out our guide to military student loan forgiveness here.


How Can I Get Help With My Loan Payments While On Active Duty?

If you take out a loan for school, your military service may require you to defer or suspend payments. There are a variety of student loan repayment options available for military members who are on active duty, so don’t be afraid to reach out and get more information if your current plan doesn’t meet your needs.

When you come off active duty, returning with additional education, increased experience and skills will make it much easier to get started in a new job and continue repaying your student loans.

If you do return from service with extra funds at hand from deployment bonuses or other pay increases, know that there is no statute of limitations on federal student loans — if you owe them, you still owe them even after many years have passed.

However, if you qualify for Public Service Loan Forgiveness (PSLF), then your remaining balance may be forgiven once you’ve made 120 qualifying monthly payments while working full-time in public service.


Finding The Best Way To Pay Back Your Student Loan Debt While In The Military.

While student loan debt is an enormous burden for most students, it can be especially burdensome if you join the military and serve your country. So what can you do about it? Here are a few tips for student loan repayment that are tailored for those serving in the military.

The more you learn about options and alternatives and understand how you’ll be affected by changes to student loan policy, the better prepared you’ll be to tackle your student loans—no matter what life throws at you. With hard work and smart decisions, you can get out of debt faster than ever before. Best of luck!

If you want to avoid repaying your student loans while serving in the military, there are ways around it: One way is to use one of several programs designed specifically for active-duty service members and veterans. One such program is called an income-driven repayment plan.

This plan allows borrowers with federal student loans who qualify (and meet other criteria) to make payments based on their income level instead of their standard payment amount.

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