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FOR SERVICEMEMBERS

Tackling student loan debt 

Protections for both federal and 

private student loans

Reduce your interest rate to 6 percent 

Under the Servicemembers Civil Relief Act (SCRA), 

servicemembers can reduce their interest rate to 

6 percent on all pre-service obligations, including 

student loans, while they are on active duty. The 

lower interest rate can be requested up to 180 days 

after leaving service, and the lower interest rate 

will be applied retroactively for the entire period of 

your active-duty military service. 

Here are two things you should know about 

reducing interest rates:

1. Federal student loan reductions are automatic:

In June 2012, the Department of Education 

made the SCRA interest rate reduction automatic 

for federal student loans. Your federal loan 

servicer should check to see if you are eligible 

for the SCRA benefit, and make the reduction 

automatically. 

Tip: Contact your servicer (the company that 

sends you a bill each month) to check out 

your current interest rate and ensure you’re 

properly receiving the SCRA reduction.

2. Private student loan reductions must be 

requested: The SCRA interest rate reduction is 

not automatic for private student loans, so make 

sure you do your part and properly request it. 

To do this, contact your student loan servicer to 

request your reduction – be sure to provide them 

with a copy of your military orders calling you to 

active duty. 

Tip: Make sure you send the right orders. 

Your orders should state the date you 

started active duty. That way, your servicer 

will know the exact date on which to start 

charging the lower interest rate.

Protections for federal student 

loans 

Zero percent interest for service in an 

area of hostile fire 

If you served in an area of hostilities and received 

special pay, your federal student Direct Loans 

qualify for a 0 percent interest rate during that 

deployment if they were made on or after October 

1, 2008. The benefit can be applied retroactively, 

so it’s not too late to contact your servicer after 

deployment to find out about what documentation 

you need to provide. 

Tip: You can receive the 0 percent interest 

rate for up to 60 months, and it can be 

applied retroactively even after you’ve left 

military service. 

Perkins loan forgiveness 

Borrowers with a Federal Perkins Loan who serve 

in an area of hostilities for more than 12 months 

straight may be eligible to have their loan balance 

reduced for each qualifying year of service. 
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Tip: In order to qualify, you must serve 12 

consecutive months in an area of hostilities, 

but if your combat service has already 

passed, you can still apply for the benefit 

retroactively. 

Military deferment 

For federal student loans, you can defer payment 

during certain periods of military service. A 

deferment just means you’re postponing payment. 

Depending on the type of loan you have, you may 

have to pay back unpaid interest at the end of the 

deferment, or it will be added to your outstanding 

loan balance. For subsidized federal student loans, 

the Department of Education will pay the interest 

for you when you use a military deferment. 

Tip: Remember that interest may continue to 

accrue during the time of deferment, unless 

you have a subsidized loan. But you can 

choose to pay all or part of the interest as it 

accrues, even if you are in deferment. If you 

don’t and interest continues to accrue, you’ll 

end up owing more after the deferment ends. 

The deferment process depends on your military 

status and where you’re serving:

§ National Guard and Reservists: Can request 

deferment when you are called to active duty 

during a time of war, other military operation, or 

during a national emergency.

§ Active duty: Can request deferment if you are 

serving on active duty during a time of war, 

other military operation, or during a national 

emergency. Remember, for those serving on 

active duty, you must also be “serving at a duty 

station at which they are not normally assigned.” 

For example, a servicemember serving at 

Fort Campbell, KY who is then deployed to 

Afghanistan or Iraq would be stationed away 

from their normal duty station and could request 

a deferment. Other scenarios such as training 

periods or periodic moves may not be as clear, 

so check with your student loan servicer.

Income-Driven Repayment (IDR) plans 

For federal Direct Loans and older federal loans 

made by private lenders, your monthly payments 

can be reduced based on your income and family 

size. Which repayment plan you may be eligible for 

usually depends on when you took out your student 

loan. Not only do these plans potentially help to 

reduce your required monthly payment, they are 

also “qualifying plans” that may help you achieve 

eventual loan forgiveness under the Public Service 

Loan Forgiveness Program (PSLF) discussed below. 

Tip: To get started with these plans, enroll 

online at studentloans.gov/myDirectLoan/

index.action or contact your student loan 

servicer to see if your loans are eligible for 

these repayment plans. 

Here are federal loan payment plans you may 

qualify for:

§ Income-Based Repayment (IBR): IBR sets a low 

monthly payment based on your income and 

family size. If you have older loans, your loan 

payment will be capped at 15 percent of your 

discretionary income. 

§ Pay As You Earn (PAYE): If you are a recent grad, 

Pay As You Earn (PAYE) (with more info here: 

consumerfinance.gov/askcfpb/1555/what-payyou-earn-paye-how-do-i-know-if-i-qualify.html) 

is a newer repayment plan that is likely available 

for your federal student loans. The plan caps 

your monthly payment at 10 percent of your 
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discretionary income. If you think you might 

be eligible, learn more about who qualifies for 

PAYE here: consumerfinance.gov/askcfpb/1555/

what-pay-you-earn-paye-how-do-i-know-if-iqualify.html.

§ Revised Pay As You Earn (REPAYE): If you are 

not a recent grad and don’t think your loans 

are new enough for Pay As You Earn, you 

should look into REPAYE, which also caps 

your payments at 10 percent of discretionary 

income. You can get a lower payment if your 

federal student loan debt is high compared to 

your income. You can learn more about who 

is eligible and the differences between these 

plans here: blog.ed.gov/2015/12/your-federalstudent-loans-just-got-easier-to-repaye/.

Tip: Get started by enrolling online in these 

plans here: studentloans.gov/myDirectLoan/

index.action. Once you sign in, select 

“Income-Driven Repayment Plan Request.” 

There is no charge to enroll in these plans. 

You can also contact your servicer about 

enrolling. They will likely ask for proof of your 

income, such as a tax return or pay stub, to 

determine your new payment.

Remember: When considering an IDR plan, keep 

in mind that if you ultimately don’t qualify for PSLF, 

paying the reduced monthly payment due under an 

IDR plan could cost more over the life of the loan 

when compared to repaying under the standard 

repayment plan. Talk to an Education Services 

Officer or a Personal Financial Manager to discuss 

your options.

HEROES Act waiver

The Department of Education waives many of the 

documentation requirements for the programs 

it administers for servicemembers during certain 

periods of military service. For example, while IDR 

plans require annual recertification of your income 

and family size, servicemembers can sometimes have 

this requirement waived. The HEROES Act waiver 

allows your servicer to simply recertify your eligibility 

during certain periods of military service. So if you 

are on a payment plan based on your income, and 

military service prevents you from providing updated 

information on your family size and income, you 

can request to have your monthly payment amount 

maintained. Contact your servicer to learn more. 

Public Service Loan Forgiveness (PSLF) 

Active duty servicemembers (and veterans) meeting 

certain requirements may have the balance of their 

federal student loans forgiven after working in 

public service for ten years. 

Tip: Under current federal rules, any amount 

forgiven under the PSLF program is not 

considered taxable income. 

To be eligible, you need three things:

1. A qualifying loan. Only federal Direct Loans 

and Direct Consolidation Loans are qualifying 

loans for PSLF. If you don’t have a Direct Loan, 

you may be able to take out a new Direct 

Consolidation Loan. 

Tip: While consolidating may help you qualify 

for PSLF, remember that consolidating while 

you are on active duty may mean you lose the 

ability to request an interest rate reduction 

under the SCRA, because your loan will no 

longer be considered a pre-service loan. 

2. A qualifying payment plan. To achieve 

forgiveness under PSLF, you need to make 120 

qualifying monthly payments. Only payments 

STUDENT LOAN OPTIONS FOR SERVICEMEMBERS
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made under certain plans count as qualifying 

payment plans. IBR, PAYE, and REPAYE are three 

of the best qualifying repayment plans since they 

also can reduce your monthly payments. 

Tip: To be counted as a qualifying payment, 

each of the 120 payments must be made 

on time – that is, within two weeks of the 

payment due date. But those 120 qualifying 

payments do not have to be made 

consecutively.

3. A qualified public service employer. The 120 

payments you make must be made while 

working for a qualified public service employer. 

The good news is, military service under the 

Department of Defense (or Homeland Security 

for Coast Guard members) counts as qualifying 

employment. And even if you are no longer in 

the service, so does employment in other public 

interest areas such as teaching or public law 

enforcement. 

Tip: Contact your student loan servicer to 

get the Employment Certification for PSLF 

form. You’ll need someone in your chain of 

command to complete and sign section three 

of the form.

For private student loans

Most protections for federal student loans do not 

apply to private student loans. Some private lenders 

will provide certain benefits under the terms of the 

promissory note or under specific programs, but 

they are not required to do so. For example, federal 

law does not require lenders to grant a military 

deferment for private student loans; however, some 

private student lenders offer this benefit or other 

specific programs. If offered, these benefits should 

be spelled out in the promissory note. 

Tip: To better understand the terms of your 

private student loan, take a look at your 

promissory note and contact your student 

loan lender or servicer for more information. 

Learn more about repaying 

student debt

The CFPB has an online tool that provides 

information and advice for optimizing how you 

pay off your student loans based on some basic 

information about your situation. While we can’t 

give you advice for your exact situation, we hope 

it can point you in the right direction and help you 

learn about some of your options. Access the tool 

at consumerfinance.gov/paying-for-college/repaystudent-debt/.

About the CFPB

The CFPB is a 21st century agency that 

helps consumer finance markets work by 

making rules more effective, by consistently 

and fairly enforcing those rules, and by 

empowering consumers to take more 

control over their economic lives.

Learn more at consumerfinance.gov