Student Loans for Military Families: Resources and Repayment Options

Military life comes with many opportunities, but also financial challenges that most people will never face. Frequent moves, deployments, and changing income can make paying for college or managing student loans feel overwhelming.

Fortunately, service members and their families have access to various programs designed to make higher education more affordable. Whether you’re an active-duty service member, veteran, or military spouse, understanding how these programs work can help you achieve your educational goals without unnecessary debt.

Current private student loan rates

What student loan benefits are available for military families?

Military members and their families have access to several student loan benefits that can lower the cost of borrowing. Here’s an overview of the different benefits available:

• Interest rate protections: The Servicemembers Civil Relief Act (SCRA) limits the interest rate on student loans to 6% while on active duty, helping reduce your monthly payments.
• Deferment and forbearance options: Military borrowers can pause federal student loan repayment during deployments and immediately following active-duty service. This option may be available for private loans, though you’ll have to contact your lender to find out.
• Education benefits: GI Bill benefits can cover the cost of your college tuition and help pay for living expenses and supplies. It won’t pay off existing loans, but it can reduce the need to borrow any money in the first place. 
• Private loan and refinancing options: Some private lenders will waive fees or offer flexible repayment terms for active-duty members and veterans.

Forgiveness and repayment programs for service members

If you’re a military service member with student loan debt, you may find it challenging to pay it down. Service members often have unpredictable income and schedules that make it harder to stay on top of student loan payments. Fortunately, there are repayment and forgiveness programs available to help you reduce or eliminate your loans entirely. 

Public Service Loan Forgiveness 

Full-time military members are employed by the U.S. government, making them eligible for Public Service Loan Forgiveness (PSLF) if they have federal student loans. If you make 120 qualifying monthly payments while working for the government, PSLF will forgive your remaining loan balance. 

What makes PSLF especially beneficial for service members is that all active-duty military service counts as qualifying employment. That is true regardless of where you’re stationed or if you change duty assignments. And paused payments under certain military deferments may still count toward PSLF under special provisions.

To stay on track, it’s important to recertify your employment each year or whenever you change duty stations. This helps the Department of Education verify your qualifying employment and ensures your progress toward forgiveness is accurately recorded.

Income-driven repayment plans

Active-duty service members with federal student loans can also enroll in an income-driven repayment (IDR) plan to make their student loan payments more affordable. These plans set your monthly payment at a percentage of your discretionary income, helping you stay current even during deployments.

Military borrowers may also benefit from built-in safeguards. For instance, interest may not accrue on certain loans while on active duty, and payments made under an IDR plan typically count toward Public Service Loan Forgiveness (PSLF). Because an IDR plan adjusts with your income, it’s one of the most flexible repayment options available for military families managing federal student loans.

Military College Loan Repayment Program 

The Military College Loan Repayment Program (CLRP) can help service members repay existing federal student loan debt in exchange for a commitment to serve in the U.S. Armed Forces. Under CLRP, eligible service members can receive up to $65,000 in federal student loan repayment assistance. 

The military makes these payments directly to the loan servicer on your behalf, typically over the first three years of service. To qualify, you must:

• Enlist for a minimum of 3 years in an eligible military occupational specialty (MOS).
• Decline enrollment in the Montgomery GI Bill in writing, using DD Form 2366.
• Have qualifying federal student loans that were taken out before enlisting.
• Have a high school diploma and a score of 50 or higher on the Armed Forces Qualification Test.
• Have no prior military service when entering the program.

Interest rate and deferment protections under the Servicemembers Civil Relief Act

Under the Servicemembers Civil Relief Act (SCRA), the interest rate for federal and private student loans is capped at 6% each year while you’re on active duty. Any interest above that amount must be forgiven, not deferred, and your lender can’t charge it later.

“We see military members and families paying more than they should for their student loans simply because they aren’t aware of the Servicemembers Civil Relief Act (SCRA),” says Eric Steffy, founder and CEO of Federal Solutions Support, which helps federal employees retire. 

“For our service members in hostile fire or imminent danger areas, interest can be reduced to 0% for up to 60 months on eligible federal loans,” he adds.

Many service members don’t realize that the 6% interest rate applies to student loans taken out before they entered active duty. “Because student loan interest rates can be as high as 14.5%, the savings can be significant,” Steffy explains. 

To qualify, you must provide proof of military service by submitting a copy of your military orders to your student loan servicers. You should also be listed as active-duty military status in the authorized military database.

How the GI Bill and military grants reduce college costs

Programs like the GI Bill and the Yellow Ribbon Program can cover a substantial portion of your college expenses, reducing your out-of-pocket costs. Let’s look at how each program works. 

Post-9/11 GI Bill

The Post-9/11 GI bill can cover the cost of your tuition, provide a monthly housing allowance, and include a yearly stipend for books and supplies. It’s available to veterans and service members who served on active duty after Sept. 10, 2001. If you’re on active duty or in the Selected Reserve and meet the requirements, you can also request to transfer your unused benefits to a spouse or child.

Montgomery GI Bill

The Montgomery GI Bill can pay for your education or training program if you’ve completed at least two years of active-duty service. The money you receive is based on your length of service, the type of education you’re pursuing, your category (I, II, III, or IV), whether you qualify for a college fund or kicker, and the amount you’ve paid into the $600 Buy-Up program. 

Yellow Ribbon Program

If you’re hoping to attend a private or out-of-state college with tuition exceeding the GI Bill limits, the Yellow Ribbon Program can help. Participating schools voluntarily contribute additional funds to cover extra costs, and the VA matches the school’s contribution. However, enrollment is on a first-come, first-served basis, and schools only accept a certain number of students each year.

“Yellow Ribbon is not automatic, and it is not the same everywhere,” says Theron Tingstad, a former Army infantry officer who does volunteer work advocating for veterans. “Some states will pay a lot more for your school than others. Participation and funding vary by school and program, and state policy matters.” 

If you decide to pursue this option, Tingstad recommends being strategic about the programs you target. 

Private loan options and refinancing for military borrowers

Most service members and veterans can cover their tuition and living expenses through a combination of GI Bill benefits and federal student loans. But certain graduate programs and private universities may cost more than your federal aid allows. In that case, you can consider taking out private loans. Fortunately, some private lenders offer special programs for military borrowers. 

For example, some lenders offer interest rate discounts, flexible repayment options, or fee waivers for active-duty members and veterans. Make sure you compare rates from several lenders, since private loans don’t come with federal protections like forgiveness programs.

You may be able to refinance any existing student loans at a lower interest rate, reducing your monthly payments and total interest costs. However, refinancing federal loans into a private loan means losing access to benefits like PSLF and IDR. Before refinancing, consider whether you’re likely to use those programs.