Service Members Could Reduce Cost of Student Loans With 0% Interest Relief
(DOD) – We achieve success by taking advantage of our opportunities, but first we must learn our opportunities, where they are, and then understand what we need to do to take advantage of them.
We want to take a moment and make sure current and former service members and families are aware of an important financial benefit opportunity they may be eligible to claim. This benefit may substantially reduce the overall cost of federal student loans for eligible service members by reducing their interest rate to zero for a limited period of qualifying service.
To appreciate this opportunity, let’s do some quick math to see the impact this benefit may provide and then walk through the details in a few simple steps.
For example, if you are a service member with $40,000 in federal student debt at 6 percent annual interest, six months of qualifying service could result in reduced interest payments totaling $1,200.
That’s $1,200 one could use to further pay down the principal on their student debt and further reduce future interest costs (that’s for another blog post), pay down other loans, invest in your retirement or help meet other day-to-day expenses.
Step 1. Know your opportunity.
Under the law, if you are a service member who is serving or has served in an area qualifying for hostile fire or imminent danger pay, then you are exempt from interest for up to 60 months on your Direct Loans or a portion of Direct Consolidation Loans. This applies to loans issued on or after Oct. 1, 2008.
First, if you don’t already know your loan type and loan servicer, log in to “My Federal Student Aid” at StudentAid.gov/login. Review your deployment history and your past leave and earning statements to confirm if and when you received hostile fire or imminent danger pay.
Step 2. Claim your opportunity.
If you believe you qualify, take the next step and apply for the student loan interest reduction. Service members – to include veterans who meet the above requirements and paid student loan interest – can apply for reimbursement. Contact your loan servicer to find out how to provide any of the following forms of proof:
– A leave and earnings statement showing receipt of hostile fire or imminent danger pay;
– A certifying official’s statement and signature; or
– Military orders showing service in a hostile area
Many loan servicer websites have an information page for military borrowers. Find specific details and learn about other benefits you may be entitled to on your loan servicer’s website.
Step 3. Share the opportunity.
Help spread the word and share the zero percent student loan interest relief opportunity with other service members, veterans or their family members. Your friends and family will thank you for sharing the opportunity to potentially save hundreds of dollars in interest.
For more information on student loan relief, visit StudentAid.gov.
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