Although I was able to pay off my student loans using the Navy Loan Repayment Program, it was not the only enlistment program that was tailored to paying off student debt. The Army also has a program tailored to paying off student loans. It’s a great way to not only pay off debt, but also serve in the Armed Forces.
Under the Army Loan Repayment Program, it will pay off qualifying student loans if a Soldier enlists under specific Military Occupational Specialties. Like the Navy Loan Repayment Program, the Army Loan Repayment Program will pay either the greater of $1,500 or 1/3 of the outstanding principal balance up to $65,000 for each year of service. The Soldier is responsible for the taxes paid on his behalf so these are usually deducted from the principal balance payment. The loans are paid after three years of service.
What are qualified loans?
Qualified loans are usually federal loans such as the Parent Loans for Undergraduate Students (PLUS), Supplemental Loans for Students (SLS), Stafford Loans, Perkins Loans, William D. Ford Loans, and Consolidated Loans that were incurred to pay for the Soldier’s education.
There are loans that are not covered in the Army Loan Repayment Program. The loans that are not covered include private loans, state funded loans, institution loans, equity loans, consolidated loans for someone other than the soldier, Parent Loans for someone other than the soldier, and USAA loans.
Term of Service
In addition to the fact that the loans must be federally guaranteed loans, there are other requirements to be eligible for the Army’s Loan Repayment Program. First, the soldier must agree to a term of service of three years or more. This is a similar requirement to the Navy Loan Repayment Program.
Declining the Montgomery GI Bill
Secondly, a Soldier must decline enrollment in the Montgomery GI Bill. When I enlisted in the Navy Loan Repayment Program, I had to initially decline enrollment in the Montgomery GI Bill. But, I was later allowed to enroll in the program because my enlistment was for six years.
Guarantee in Writing
Thirdly, the Soldier’s enlistment contract must have the Loan Repayment Program guaranteed in writing. This was similar to my experience in the Navy. My recruiter and I continuously monitored the enlistment contract to ensure that the Loan Repayment Program was in writing.
Satisfactory ASVAB Score
Next, the Soldier needs a high school diploma and score of 50 or higher on the Armed Services Vocational Aptitude Battery (ASVAB). This is similar to the Navy. My recruiter insisted that I take a practice test before I took the ASVAB so that we would have an idea how high I would score. Once he was confident that my score was competent, we went to the Military Entrance Processing Station to take the official ASVAB test.
Enlist in Critical MOS
Finally, the Soldier had to enlist in a critical MOS that falls under the program. The army recruiters have the list of critical MOS and it changes on a periodic basis. In the Navy, we called an MOS a rating. Like the Army, the Navy recruiters ensured that I enlisted in a critical rating as these were the highest needs of the Navy. In both programs, it is critical that the Soldier or Sailor remain in the same MOS or else they forfeit the Loan Repayment program. So, it’s also important that the Soldier is not discharged from service before their three year enlistment or else they lose their benefits.
Payments to Lender
It should be noted that under the Loan Repayment Program that the payments are made directly to the lender and not to the Soldier. The Army will make the first payment after one year of service is completed and will deduct the taxes so that the IRS receives its fair share of the loan repayment. The remaining unpaid principal will be paid after the second and third year of service are completed.
If you are looking for a way to pay off your college loans, it is highly recommended that you seek the advice of a recruiter and work with them to determine your eligibility. It may be one of the most rewarding experiences that you will have.