I’m a Military Reservist Heading Out for Active Duty With Problem Student Loans


Dear Steve,

I incurred a large amount of student loan debt ($120k of private loans and $24k of federal loans). I am a reservist who has deployed 3 times and preparing for my 4th deployment and this time to Afghanistan. I’m looking into options to reduce my student loan debts.

Are there any programs for the military to clear debt quicker besides the SCRA? Thank you very much!



Dear Michael,

I happen to also be a firefighter so let me say something to you that I often hear, “thank you for your service.”

The federal loans are easy to take care of. See this past post. What you absolutely want to avoid with the federal loans is a military deferment. Instead, get those loans ready for potential forgiveness after 120 payments in public service.

You mentioned the SCRA (Servicemembers Civil Relief Act) that does have some provisions for how loans are handled.

The provisions of the SCRA are helpful but expire once you are back home.

For example, creditors must reduce the interest rate on debts to 6 percent but they don’t always have to keep it at that rate. You have stronger protections from non-judicial foreclosure and default judgments, enforcement from storage liens, income taxes due right now, and eviction. – Source

But the SCRA is not a magic wand. Plenty of eligible active-duty military members have been subject to interest rates and actions they should have been protected from. Creditors make mistakes and errors all the time.

When it comes to private student loans and the SCRA, it’s complicated.

For example, “A student loan hypothetical under Section 3937 of the SCRA, 50 U.S.C. § 3937: John Doe takes out five private student loans prior to entering into military service. After entering military service, Servicemember Doe consolidates his five loans into one loan. Six months later, he hears about the SCRA’s six percent interest rate cap and requests that the interest rate on his loan be lowered to six percent per year. He sends in a written notice and a copy of his military orders.

See also  Student Loans: Oversight of Servicemembers' Interest Rate Cap Could Be Strengthened

Question: Is Servicemember Doe entitled to the six percent interest rate cap?

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

Answer: Only for the period of time between when he entered military service and when he consolidated his private student loans. Servicemember Doe’s existing student loan originated during a period of military service. See 50 U.S.C. § 3937(a)(1).”

Other than the supposed benefits under SCRA for private student loans, don’t count of the private lenders to do much if anything. According to Navient, along with an interest rate cap of six percent, you should also not be charged fees or other charges during your active SCRA period. – Source

Bottom Line

The federal program I linked to for you can eventually lead to some loan forgiveness.

There are no private student loan forgiveness programs for the military. However, some may postpone your payment due, but interest will still accumulate.

I know this is a complete hassle, but I’ve had people login to check on the status of their student loans from the front lines of battle. While you are away, be sure to do the same to make sure the lenders have properly applied payment and interest rate benefits so you don’t come home safely to a nasty surprise.

Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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