Cancellation of Federal Student Loans
Benefit Fact Sheet
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.
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 14, 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 their eligibility for cancellation for services performed on or after the date of acceleration.
For more information on Perkins cancellations, please visit the Federal Student Aid Forgiveness, Cancellation and Discharge webpage maintained by the Department of Education:
Title 34 CFR 674.59 - Cancellation for military service: