We receive many calls and emails wanting to know what can be done for a borrower because they are in or were in the military. Past service is not subject to really any programs as everything that exists is for those in a activity duty status. However for those individuals, active duty or not, you are awarded the same benefits of all borrowers (or at least those qualify for reasons that are not based on service).
There are primarily four programs that active military member qualify for that are active duty and meet the other requirements. Here are the highlights of each:
National Guard Duty Forbearance
As always it is easiest to copy what the qualifications are directly from the published criteria. You may qualify for a National Guard Duty forbearance if you:
-Are a member of the National Guard and engaged in either:
-Active State duty under which a governor activated you based on state statute or policy, and the activities of the National Guard are paid for with state funds.
-Full-time National Guard duty under which a governor was authorized, with the approval of the president or U.S. Secretary of Defense, to order you to state active duty, and the activities of the National Guard are paid for with federal funds.
-Do not qualify for a military service deferment or other deferment while you are on active military state duty.
-Were activated no more than six months after the last date you were enrolled in school at least half time.
The National Guard duty forbearance is granted for a maximum of twelve months at a time. Please remember that if you wish to place your loans into forbearance that interest will accrue and may be added to the principal through capitalization. This naturally can cause higher your balance and ultimately your payments can increase over time as a result.
Depending on the age of your loans there are two types of Military Deferments: Military Armed Forces Deferment and Military Service Deferment. In order to qualify for the Armed Forces Deferment, your Stafford Loans must be disbursed prior to July 1, 1993, your PLUS loans before August 15, 1983 and Consolidation Loans are not eligible. A borrower must be on active duty with their branch for one year.
For the Military Service Deferment, prior to October 1, 2007 this deferment was only available to loans disbursed on or after July 1, 2007. However as of October 1, 2007 this deferment is available to anyone who meets the requirements. The requirements are anyone one of the three:
a) A reserve order to active duty
b) A retired member ordered to active duty for service in connection with a war or other military or national emergency, regardless of location
c) Any other member of the Armed Force on active duty in connection with the emergency or war connection, who has been assigned to duty station at a location other than the location where the member is normally assigned.
Department of Defense Forbearance
As part of the military you may be eligible to have the Department of Defense pay for a portion or all of your student loans. However the military only makes this payment annually. Under normal circumstances this would cause the borrower to run up a significant delinquency. To counteract this the Department of Defense Forbearance was created. The DOD Forbearance is used to keep the account current while payment is awaited for from the DOD.
This forbearance must be applied for annually as it is only valid in 12 month increments. However it is an unlimited forbearance. The last section of the application must be filled out by a certified official (typically a commanding officer) in order to certify enrollment in the program.
Military Service and Post-Active Duty Student Deferment Request
This is one I didn’t even know about until recently. If you are a member of the National Guard (including a member in retired status) during a time when a governor activated National Guard personnel for active state duty for a period of more than 30 consecutive days and qualify
for a Post-Active Duty Student Deferment, but not the Military Service Deferment, you may request forbearance for your period of active duty service.
Your deferment will end the earlier of:
(a) The date you resume enrollment at an eligible school on at least a half-time basis; or
(b) 13 months following the completion date of your active duty service and any applicable grace period.
If you are additionally granted a Military Service Deferment, the 180-day period described in Item A above will run at the same time as your Post-Active Duty Student Deferment period. Therefore, you will receive no more than 13 months of deferment following the completion of your qualifying military service.
What if I don’t qualify for any of these?
There may be times you don’t qualify for these forbearances or deferments. For example training periods are not eligible for the Military Deferment. But even if you don’t qualify there are still things you can do in order to to help with your loan payments.
Base your payment on your income. This may give you an affordable payment. In addition this will help your payments qualify towards Public Service Loan Forgiveness.
Student Loan Debt Burden Forbearance. If your loans are 20% of your income you qualify. If you have no income you can certify online in most cases.
General Forbearance. If all else fails and you have forbearance time available, you can use this catch all.
What if I am not available to apply for these things?
Often times especially when going into active duty you are leaving at a moment’s notice and you may not have time to contact your servicer. For the military deferment for the first year anyone can call and inform of the borrower’s status but not for subsequent years. What is easiest overall though if you are anticipating a long departure period or multiple stints away you may want to consider a power of attorney. When another individual is designated as a POA they can act like the borrower, sign for the borrower, make changes to the account and even access the online account.