Military Spouse Student Loan Forgiveness: What to Know About Each Option

Military-service member borrowers account for nearly $3 billion in student loan debt, according to the most recent data from the Consumer Financial Protection Bureau. These borrowers aren’t the only ones dealing with student loan repayment while making sacrifices for our country as part of the Department of Defense (DoD). Military spouses deal with unique challenges most of us will never understand, and many of them do it while trying to pay off debt from educational pursuits.

There are student loan forgiveness programs for service members, but there are currently no military spouse student loan forgiveness benefits.

Instead, military spouses have options to pay off student loan debt thanks to general loan forgiveness programs and GI Bill transferability rules. If you’re a military spouse, keep reading to learn about your options when paying for your college education.

The GI Bill and military spouses

The GI Bill dates back to 1944 and was created to help military service members and their families cover educational costs for college and other types of training. The Post-9/11 GI Bill brought changes to eligibility and benefits covered by the GI Bill for active duty service members after September 10, 2001.

The Post-9/11 GI Bill provides up to 36 months of benefits, including:

• Tuition and school fees
• Monthly housing allowance
• Money for books and supplies
• Limited moving expenses

Transferring Post-9/11 GI Bill benefits to a spouse

The GI Bill is a great help to members of the Armed Forces, but it can also benefit military spouses. That’s because qualified service members can transfer all or a portion of their Post-9/11 GI Bill benefits to a spouse or child.

There’s a catch for service members who want to transfer benefit eligibility to a spouse for their college expenses. To transfer benefits, service members must:

• Have completed at least six years of service on the date your request is approved
• Agree to add four more years of service

As a military spouse, you must be enrolled in the Defense Enrollment Eligibility Reporting System (DEERS) to receive GI Bill benefits.

Post-9/11 GI Bill benefit amounts and timelines

Currently, spouses who receive transferred benefits can get full tuition (and fees) if they attend an in-state school and up to $26,042.81 annually at a private school. The GI Bill doesn’t cover out-of-state schools that charge tuition above the resident rate.

Military spouses also have options regarding when to use GI Bill benefits. Once approved, you can opt to start using the benefits right away, whether your spouse is on active duty or not. You can also use the benefits for up to 15 years after separation from active duty. The only extra stipulation is you can’t apply the funds toward a monthly housing allowance during active duty times.

Four years is a considerable amount of time to add to someone’s military service. If your spouse wasn’t planning on staying in the service that long, GI benefits might not be the best option to pay for school.

Are GI Bill benefits ever limited for military spouses?

Most members of the Armed Forces don’t make a career out of the military. If they only serve a few years and then get out, education benefits received through the GI Bill are limited.

Financial benefits received through the GI Bill are prorated based on the length of service. Navigating GI Bill benefits isn’t easy with all of its requirements and stipulations. Visit milConnect for more detailed information about how to apply for a benefit transfer.

Student loan forgiveness programs for military spouses

As mentioned, there are no military spouse student loan forgiveness programs, per se, and GI Bill benefits don’t help for existing education loans. You can still receive loan forgiveness through conventional federal loan forgiveness programs, though, thanks to various U.S. Department of Education options. Note that private student loans are ineligible.

Depending on your situation, you can have up to 100% of your leftover student debt bill forgiven, tax-free, after meeting program requirements. Here’s an overview of loan forgiveness programs available for military spouses right now.

Public Service Loan Forgiveness

The Public Service Loan Forgiveness Program (PSLF) is a federal program for individuals who work at eligible public service jobs like non-profit organizations. Military spouses who work full-time for eligible employers can have their student loan debt wiped out in as little as 10 years.

To qualify, you need to:

• Make 120 full and on-time monthly payments while under an income-driven repayment (IDR) repayment plan (such as Income-Based Repayment, Pay As You Earn, Revised Pay As You Earn and Income-Contingent Repayment), and
• Work for a qualifying employer

PSLF can be tricky if you tend to move around a lot, which is often the case for military families. The good news is this military spouse student loan assistance program doesn’t require borrowers to make 120 qualifying payments with the same employer. Even better, your forgiven loan debt isn’t subject to income tax.

IDR loan forgiveness

All hope isn’t lost if you don’t meet PSLF requirements. There’s another way to have your federal student loan debt forgiven. To do this, you’ll need to sign up for an IDR plan. Depending on which plan you choose, any remaining balance after 20 or 25 years of repayment is forgiven. This loan repayment program also caps loan payments as a small percentage of your income, generally 10% to 20%.

Unlike PSLF, you’ll pay taxes on the forgiven debt amount with IDR forgiveness. Depending on the forgiven amount, you could be facing a hefty tax bill. You’ll have a couple of decades to plan and save for your tax payment, though.

Note that servicemembers with old loans should consider consolidating prior to June 30, 2024 to take advantage of the IDR waiver program.

Teacher Loan Forgiveness

Military spouses who work as educators might qualify for teacher loan forgiveness. If qualified, you could receive loan forgiveness of up to $17,500 on select federal student loans. Teacher loan forgiveness requires that you work at least five consecutive years at a low-income school or educational service agency.

In addition to the length of service, this military spouse student loan assistance path is reserved for highly qualified teachers. This forgiveness option might require displaying competency through certification or a licensing examination.

Choosing the right student loan forgiveness program

The best student loan forgiveness program for military spouses is the one (or ones) they qualify for. Keep in mind that not all loan forgiveness options work well together. Take time to analyze your situation and available options for the program or programs that make the most sense for your family.

In the meantime, if you're having difficulty making payments, consider deferment and forbearance. If forgiveness isn't the right fit, you can consider refinancing to a lower interest rate as well with a private lender (consider wisely as you'll forfeit forgiveness and other benefits).

Being a military spouse is challenging enough without the added stress that comes with student loan debt. Take advantage of GI Bill benefits to fund your education or loan forgiveness programs to cover existing loan debt.