Federal Student Loan Program Benefits for Veterans
There have been many changes in federal student loans during the past few years. Veterans should log in to the NSLDS web site for students and print out a comprehensive record of their federal student loans.
New Deferment and Discharge Options
New Military Service Deferment / Post Active Duty Student Deferment Request
On November 26, 2010, the Department of Education announcd the approval of a new Deferment Request: Military Service Deferment/Post-Active Duty Student Deferment form for use by borrowers in the Federal Direct Stafford Loan Program, the Federal Direct PLUS / Grad PLUS Loan Programs, and the Federal Perkins Loan Program, and provided guidance on implementation of the new form.
Veterans Disability Discharges:
There is a streamlined process for granting total and permanent disability discharges for veterans who the Department of Veterans Affairs has determined are unemployable due to a service-connected disability. Under the streamlined process, the loan is not assigned to ED—the loan holder only submits the Total and Permanent Disability application and VA documentation to ED.
- ED determines borrower eligibility for TPD discharge based on the VA documentation
- ED notifies the school to either discharge the loan or resume collection
- If ED denies the disability discharge request, the borrower may reapply for a TPD discharge under the standard total and permanent disability discharge procedures
The Higher Education Relief Opportunities for Students (HEROES) Act provides for the modification and waiving of some statutory and regulatory provisions related to students who receive financial aid and who are on active duty during a war or other military operation or who reside or are employed in a declared disaster area. These adjustments apply to return of funds and signature requirements for verification and application, among other things. These waivers and modifications were due to expire on September 30, 2007, but on that date the law—and with it the Secretary’s authority to issue the waivers and modifications—was made permanent. As a result, the above actions will remain in effect until September 30, 2012, unless the Secretary ends or changes them before then. For all the details on the Act and a list of the eligible students, see pages 69312–69318 of the Federal Register dated December 12, 2003. (Reference page AVG-85)
During the period of eligible military service:
- Forbearance and military service deferment documentation requirements are relaxed
- In-school status is retained
- Grace period or school-related deferment status is retained for up to 3 years
- Collection activity on defaulted loans may be suspended
- Missed payments are not treated as an interruption of a stream of required payments
- Return of Title IV requirements are modified
- Copies of IRS forms documenting AGI and income tax paid are not required
- Written leave of absence request is not required
- Requirement that loan cancellation or forgiveness service be uninterrupted or consecutive does not apply
- Period of time for cancelling loan proceeds under cash management regs is extended
- Oral, rather than written, authorizations from the borrower may be accepted by the school
Servicemembers Civil Relief Act
On December 19, 2003, the President Bush signed into law H.R. 100, the Servicemembers Civil Relief Act. This law completely rewrites the Soldiers and Sailors Civil Relief Act of 1940, expanding many of the previous law's civil protections.
Provisions of this law now apply to federal student loans: (see page 120).
- The MAXIMUM interest rate for active duty service members with FFEL or Direct Loans is 6%
- Effective August 14, 2008 for loans made PRIOR to active duty military service
- Borrower must request in writing and provide copy of military orders
- The 6% interest rate is in effect while the borrower is on active duty military service.
Perkins Loan Military Service Cancellation
Borrowers serving in areas of hostility now are eligible to receive up to 100% cancellation of the Perkins Loan for each full year of active duty service that includes or begins on/after 8/14/08 according to the following schedule:
- 15% for the first and second years of service
- 20% for the third and fourth years of service
- 30% for the fifth year of service
For Additional Help
You can contact Federal Student Aid's Office of the Ombudsman for additional help in resolving any problems with your federal student loans.
- For Members of the Armed Forces: What You Need to Know About Your Federal Student Loan Benefits
- Action Guide For Service Members with Federal Student Loans
- The Next Front: Student Loan Servicing and the Cost to Our Men and Women In Uniform
Updated August 8, 2013