Under the Navy Loan Repayment Program, those who join or reenlist in the Navy may qualify for a significant amount of student loan relief. The program will pay up to $65,000 toward an eligible service member’s student loans.
Read on to learn more about the Navy Loan Repayment Program.
Table of Contents
Key Points
• The Navy Loan Repayment Program offers up to $65,000 in federal student loan relief for eligible service members.
• Eligibility requires enlisting or reenlisting in the Navy and a minimum score of 50 on the Armed Forces Qualification Test.
• The program pays 33.3% of the outstanding loan balance annually for three years of service.
• Only federal student loans qualify, including Direct Loans, PLUS Loans, Consolidation Loans, and Perkins Loans.
• Applicants must have a student loan that’s not in default to qualify for the program.
Who Qualifies for the Navy Program?
The Navy Loan Repayment Program is a military student loan repayment program that can provide up to $65,000 of federal student loan repayment assistance for Navy personnel who qualify. The program is offered to service members who are enlisting or reenlisting for active duty in the Navy.
To be eligible for the loan repayment program, service members must meet the following criteria.
• They must have a high school diploma.
• They must enlist or reenlist for active duty with the Navy.
• They must have achieved a minimum score of 50 on the Armed Forces Qualification Test, which the Navy uses to measure a potential sailor’s IQ and aptitude.
• They must have a loan that is not in student loan default.
How Navy Student Loan Repayment Works
Through the program, the Navy will pay 33.3% of a service member’s outstanding loan balance or $1,500 a year, whichever is bigger, for each year of Naval service for up to three years.
Only federal student loans qualify for the loan repayment program. The eligible types of student loans include:
Federal Direct Loans. Subsidized and Unsubsidized Direct Loans are low-interest loans made by the U.S. Department of Education to qualified borrowers for tuition and other college expenses.
Federal PLUS Loans. Otherwise known as Direct PLUS Loans, these loans are offered by the U.S. government to graduate or professional students to cover tuition and college costs. In many cases, Direct PLUS Loans offer funds to help cover education expenses not covered by other financial aid programs.
Direct Consolidation Loan. A Direct Consolidation Loan bundles multiple federal loans into a single loan, streamlining the repayment process.
Perkins Loans. These low-interest loans were geared toward college students who demonstrated exceptional financial need. The Federal Perkins Loan Program stopped disbursing loans in 2018, but Navy personnel may still have outstanding Perkins Loan debt and thus are eligible for help from the Navy Loan Repayment Program.
A Navy applicant is typically given the option to enroll in the Loan Repayment Program at the Military Entrance Processing Stations.
MEPS, the stations funded by the U.S. Department of Defense to enroll military service members, handle their applications and assess their physical, mental, and emotional health to see if they’re fit for military service.
What Documents Do You Need To Apply?
All documents needed to apply are available at the MEPS recruiting center. Those interested in the Navy Loan Repayment Program can connect with a recruiter for more information.
Filling Out the Loan Repayment Form
The key document when applying for the Navy Loan Repayment Program is DD Form 2475, which is broken down into four sections.
Section 1 is completed and approved by the recruiting officer (i.e., the verifying official). The section includes the naval office address and contact information so the lending institution can forward the proper paperwork. Basically, Section 1 includes the recruiter’s name and signature and the date.
Section 2 includes the applicant’s name, address, telephone number, email address, and Social Security number. This section is completed by the service member/applicant.
Section 3 includes the student loan data (including the borrower’s name, the loan amount, outstanding balance, the original date of the promissory note, the loan holder address, email and phone number, and the loan application number). The section also includes a box noting whether the student loan is in default or not, and asks for the name and address of the financial institution where the loan aid is to be sent.
Section 4 is a grid where more information on the loan can be included to expedite processing. Sections 3 and 4 are filled out by the student loan servicing agency.
Important Things to Know
There are two guidelines that applicants for the Navy Loan Repayment Program should be aware of:
Payments are taxable. Any payments made by the Navy to the service member are taxed, as the IRS deems student loan relief as taxable income in the year the money is paid out. There may be state taxes for this loan relief as well.
Lenders only. The Navy will not refund any loan amount that is paid out by other parties aside from the qualified student loan lenders. Private student loans may not be covered by the program.
Other Ways to Repay Student Loans
Borrowers who are uncertain about a military commitment or who may be struggling to make student loan payments, have alternatives to military-supported repayment.
One option for those with federal student loans is income-driven repayment plans, which base a borrower’s monthly payments on their discretionary income and family size. The repayment term is 20 to 25 years. After that, any remaining balance is forgiven on one of the IDR plans, the Income-Based Repayment (IBR) Plan.
Another alternative is student loan refinancing. With refinancing, a borrower’s student loans are replaced with one new loan from a private lender.
While there are advantages to refinancing student loans, there are disadvantages to know about. If you are thinking of taking advantage of federal benefits like income-driven repayment or Public Service Loan Forgiveness, refinancing may not be right for you because you’ll lose your eligibility for federal programs.
Borrowers who do not plan on using federal benefits and choose to refinance may qualify for a lower interest rate or lower monthly payments. They’ll have only one payment a month and may be able to either lengthen or shorten the term. Note: You may pay more interest over the life of the loan if you refinance with an extended term.
If you’re interested in refinancing, SoFi offers an easy online application, no fees required, and competitive rates. It takes just minutes to see if you prequalify, and checking your rate will not affect your credit score.
FAQ
Does the Navy offer a loan repayment program?
Yes, the Navy offers a military student loan repayment program. Called the Navy Loan Repayment Program, it provides up to $65,000 of federal student loan repayment assistance to Navy service members who are enlisting or reenlisting for active duty.
How does Navy loan repayment work?
The Navy Loan Repayment program offers up to $65,000 of federal student loan relief to Navy service members who are enlisting or reenlisting. Through this program, the Navy will pay 33.3% of a service member’s outstanding loan balance or $1,500 a year, whichever is bigger, for each year of service, up to three years.
How much money does the Navy Loan Repayment Program pay?
The maximum repayment amount is $65,000 for the Navy Loan Repayment Program. The payments are 33.33% of a service member’s outstanding federal student loan balance annually for each year of service in the Navy for up to three years.
SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).
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