Loan Repayment for Active-Duty Personnel
The military has some of the juiciest loan forgiveness programs around, especially for health-care professionals with graduate school loans. As always, someone pursuing this type of financial assistance should be sure he sees everything in writing and fully understands the fine print of the program before enlisting or committing to serve.
The two main programs available for active-duty personnel are the Military College Loan Repayment Program (CLRP) and the Health Professionals Loan Repayment Program (HPLRP). Both of these programs forgive a substantial amount of student debt, but they have different rules and requirements you need to understand.
One important fact to keep in mind with military loan repayment programs is that the forgiven amounts are considered taxable income. This means that income tax withholding occurs on these programs, reducing the actual dollar amount of forgiveness by roughly 25 percent initially, although this can rise or fall when someone actually files each year’s tax return.
Here are the basics:
• Military College Loan Repayment Program(CLRP)—Depending on the branch, this program might exist under a different name or with slightly different rules, but the premise is the same. Up to $65,000 in student loans is forgiven for three to four years of military service. But to receive this benefit, a service member has to give up his rights to any additional tuition assistance under the GI Bill.
• Health Professionals Loan Repayment Program(HPLRP)—This program primarily forgives the student loans of health professionals with graduate-level degrees, along with registered nurses. Although the amount itself varies with the person’s health profession, loan forgiveness amounts can easily exceed $100,000. The typical commitment is for four years of military service.
FLUNK-PROOF FINANCES
One of the biggest worries of many people considering the military to help fund their education expenses is the chance that they’ll be injured or killed in service. For those wanting to minimize their chances of becoming a casualty, they should consider the Coast Guard, the Air Force, and the Navy, in that order.
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