Military Student Loan Information

Service members may face barriers when requesting and retaining protections afforded by the Servicemembers Civil Relief Act (SCRA).

Like their fellow Americans, many servicemembers have student loan debt. Congress has enacted a number of protections and benefits for servicemembers to help manage their student loan debt. Unfortunately, the complexities of these provisions, together with problems in loan servicing, have created difficulties for many military families when attempting to manage their debt.

The SCRA allows a servicemember to receive an interest-rate reduction to six percent during their time spent on active duty.1 This protection has always applied to private student loans, and the higher Education and Opportunity Act of 2008 extended the protection to federal student loans.

To qualify for the protection, a servicemember must have entered into the student loan prior to entry onto active duty. They must send a written request to their loan servicer requesting the reduction along with a copy of his or her orders calling them on to active duty. This request may be submitted at any time during a servicemember’s active service, and up to 180 days after completion of active duty.2

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1The SCRA states that the borrower’s military service must have materially affected his ability to repay the debt. However, the burden is on the servicer to prove there was no material effect in order to validly deny the request. And establishing material effect is not merely whether a borrower’s income was reduced upon entering military service; other factors, such as maintaining dual households, relocation, or other lifestyle changes may establish the requisite material effect. See also Baxter v. Watson (In re Watson), 292 B.R. 445 (S.D.Ga. 2003)

2Although the law puts the initial responsibility on the servicemember to provide proof of eligibility, specifically requiring the servicemember to provide “a copy of the military orders calling the servicemember to military service and any orders further extending military service,” a servicer cannot impose additional requirements. 50 U.S.C. Ap. §527.

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