Cancellation of Federal Student Loans

Regular Army: Active Duty

Benefit Fact Sheet

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Summary:

Cancellation of loans under the Federal Perkins Loan Program permits Soldiers on active duty in hostile fire or imminent danger pay areas to cancel up to 100% of their Federal Perkins Loans or National Direct Student Loans. This benefit does not apply to Stafford Loans or PLUS Loans.

Eligibility:

Active duty Soldiers in hostile fire or imminent danger pay areas for at least one year are eligible for Cancellation of their Federal Perkins Loan Program student loans.

Benefit Highlights:

An institution will cancel up to 100 % of a Soldier's Federal Perkins Loan Program loan for service as a member of the U.S. Army in an area of hostilities that qualifies for Special Pay under section 310 of title 37 of the United States Code. A cancellation of a Federal Perkins Loan Program student loan releases a Soldier from all obligations to repay the portion of the loan that was cancelled.

The maximum loan amount that may be cancelled is 100% of the original loan principal plus interest. The 100% maximum applies to five full years of active duty service that include August 14, 2008, or begin on or after that date. The cancellation rate is 15% of the original loan principal, plus the interest on the unpaid balance accruing during the year of qualifying service, for the first and second full years of qualifying service, 20% for the third and fourth full years of qualifying service, and 30% for the fifth full year of qualifying service.

For full years of service that predate August 18, 2008, the maximum amount that may be cancelled is 50% of the original loan balance plus interest. For these loans, the cancellation rate is 12.5 % of the original loan principal, plus the interest on the unpaid balance accruing during the year of qualifying service, for each complete year of qualifying service.

Service for less than a complete year, including any fraction of a year beyond a complete year of service, does not qualify for military cancellation. If a loan defaults and has been accelerated, an individual loses his or her eligibility for cancellation for services performed on or after the date of acceleration.

Additional Information:

For more information on Perkins cancellations, please visit the Federal Student Aid Forgiveness, Cancellation and Discharge webpage maintained by the Department of Education:
https://studentaid.ed.gov/repay-loans/forgiveness-cancellation#perkins-loan

Document Review Date: 30 September 2015