100 disabled veteran benefits student loan forgiveness

Suppose you’re a service member or veteran with student loan debt. In that case, you need to be aware of available options to get significant relief from that debt before a public student loan forgiveness program potentially expires later this year.

Student loan forgiveness options specifically tailored to veterans are lacking. The programs available to everyone, regardless of their service, are often a better choice than those geared specifically toward service members.

That’s because student loan repayment programs for the military often provide a very limited benefit. In some cases, the benefit even counts as taxable income. 

If you’re still on active duty, you should consider whether your branch offers a College Loan Repayment Program benefit. This can provide up to $65,000 toward student loans.  

However, I’d like to highlight some additional options you may not be aware of.

READ: Military families share how they achieved debt-free living

Public Service Loan Forgiveness waiver

Through Oct. 31, the Department of Education will count all prior payments and military deferment toward the Public Service Loan Forgiveness (PSLF) program. 

To obtain this benefit, you need to consolidate at Federal Student Aid website, and then you need to apply at studentaid.gov/pslf by listing all of your employment history. You will want to get signatures to verify your service.  

Veterans with more than 10 years of credit can get all of their loans discharged tax free due to this program. 

And if you fall short of the 10 years needed to qualify, you can get a considerable additional amount of credit and possibly find work in a nonprofit or government job to complete the 10-year requirement.

Income-driven repayment waiver

In April 2022, the Biden administration announced an Income-Driven Repayment waiver (IDR). 

This program allows many kinds of forbearances and payments to count toward loan forgiveness programs beyond the PSLF, which is limited to public servants who have served or plan to serve for 10 years full time. 

Older borrowers with many years of payments can possibly get their loans forgiven entirely if they have been in repayment for 20 years or more.

VA disability student loan discharge

The government has started matching borrower records with veterans with who have a 100% disability rating to forgive their student loans. 

If you are permanently disabled or have a 100% disability rating, contact your servicer to see if you can qualify for this discharge, as it would be tax-free.

Beware of scams targeting veterans

Veterans have long been the target of scams and schemes designed to separate you from your money. 

Know that student loan companies will rarely call you. If anyone calls you promising you “Biden student loan forgiveness” or hyping a limited time benefit, beware and contact your servicer. 

Sometimes it’s true that there’s a limited-time benefit, such as with the PSLF waiver above, which expires Oct. 31. 

Most companies that reach out to you about student loans want to charge you a four-figure fee to consolidate, which does not provide you with a plan and might not even help you.  

When in doubt, contact your servicer and ask if they called you or emailed you. If they didn’t, don’t respond to companies saying they can help you get student loan forgiveness.

Sometimes pay back your loans, but sometimes do not

One of the biggest misconceptions about student loan debt is that it’s like any other debt. It is not. 

Some advice you might read suggests paying off your balance in full. That might make sense for some people, but it does not make sense if you plan to work for 10 years in public service.  

Over 100,000 borrowers have received PSLF in the past year alone, largely due to the extensive waiver of program requirements during the pandemic. 

Realize that sometimes you need to pay back your student loans, but other times you will want to make yourself aware of the many different loan forgiveness programs that can help you get your student loans wiped away.  

Furthermore, Congress passed the American Rescue Plan, which eliminates all taxes on student loan discharge and forgiveness from now until the end of 2025.  

Get help figuring out your student loans

While you should start by contacting your servicer about the opportunities listed above, you can also reach out to our team at Student Loan Planner to get professional help from one of our CFP® or CSLP® professionals.

Veterans deserve more, but often get left holding the bag when it comes to student loan debt. Do your homework and get help figuring out your student loan options if you think you need it.

Travis Hornsby, CFA is a speaker and the founder of Student Loan Planner, which he launched after helping his physician wife navigate ridiculously complex student loan repayment decisions. To date, Student Loan Planner has consulted on over $1 billion in student debt. Travis is a chartered financial analyst. He’s been featured in U.S. News, Business Insider, Forbes, Huffington Post, Rolling Stone, ChooseFi, Bigger Pockets, Afford Anything, Money, and more.

Looking for more education resources? Click here for your free copy of the 2022 Military Education Guide.

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