The U.S. Department of Education has automatically waived the interest on federal student loans for more than 47,000 current and former active-duty military personnel, according to an Aug. 20 press release. Previously, eligible service members had to apply for the interest waiver, resulting in only a small proportion taking advantage of this benefit.
Brave men and women in uniform serving our country can now focus on doing their jobs and coming home safely, not filling out more paperwork to access their hard-earned benefits.
Eligible military personnel who were deployed to areas of imminent danger qualify for no interest on certain federal student loans disbursed on or after Oct. 1, 2008, under the Higher Education Act. The Education Department's latest move automatically processes benefit eligibility and retroactively waives the interest on these loans.
Not all veterans and active-duty service members will qualify for this interest waiver. If you're looking for other ways to save money on student loan interest, consider the alternatives like federal forgiveness programs and student loan refinancing.
You can compare student loan refinance rates from multiple private lenders without impacting your credit score on Credible.
What to do if you don't qualify for the military interest-waiver benefit
Student loan borrowers who serve the U.S. military are eligible for unique student loan benefits, such as a 6% interest rate cap as part of the Servicemembers Civil Relief Act (SCRA) and even student loan repayment assistance through the Department of Defense (DOD).
Veterans and active-duty military service members who can't keep up with their federal student loan payments are eligible for military service deferment and income-driven repayment plans. But the benefits don't end there. Here are a few ways for military personnel to save money on their student loan debt:
- Apply for the Public Service Loan Forgiveness program (PSLF). Student loan borrowers who are employed by a federal agency — including military personnel — may be eligible to have their federal student loan debt discharged after making 120 qualifying student loan payments. PSLF eligibility is complicated though; 98% of PSLF applications are denied, according to the most recent data.
- See if you qualify for a total and permanent disability (TPD) discharge. About 323,000 Americans qualify for a TPD discharge. By the end of 2021, the Biden administration will automatically discharge the federal student loan debt of borrowers who have a disability that's identifiable through the Department of Veterans Affairs.
- Refinance to lower your student loan interest rate. Refinancing your private student loans can help you get out of debt faster and lower your monthly payments. Student loan refinance rates are near historic lows, which means it may be a good time to pay off your college debt at a lower rate.
It's not recommended that you refinance your federal student loans, especially if you're hoping to take advantage of military benefits. Switching your federal student loans to private student loans would make you ineligible for certain deferment and forgiveness measures.
You can shop around for student loan refinance offers for free on Credible to see if this option makes sense for your financial situation.
Is student loan refinancing right for you?
Refinancing your private student loans can help you lower your monthly payments, pay off your college debt faster and save money over the life of the loan. Borrowers who refinanced to shorter-term student loans on Credible saved nearly $17,000 on interest and shaved years off their repayment schedule, while those who refinanced to a longer term were able to reduce their monthly payments by more than $250 on average.
But student loan refinancing isn't advisable for all borrowers. For instance, refinancing your federal student loans into a private student loan would make you ineligible for federal protections like administrative forbearance and student loan forgiveness programs.
If you have private student loan debt, it’s worth looking into refinancing while interest rates are near record lows. Refinancing to a lower rate can help you save money over time and make your college debt more manageable.
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