Question: I’m a military wife, and my husband died on active duty, so I’m now a widow. My student loan is $67,000. I am 57 years old and cannot afford to repay the loan because I am on a fixed income. I’m a daycare teacher and I was on an income-driven payment plan until COVID hit and everything was put on hold. I have to cancel my loan, I don’t know where to start. Can you help ?
To respond: First of all, we would like to offer you our deepest condolences on the loss of your husband. We are grateful for his service.
Let’s try to help you with your student loan by outlining the forgiveness options – including some specific to military spouses who might provide you with financial compensation.
Consider loan forgiveness
As a teacher, you may be eligible for Teacher loan forgiveness and Cancellation of civil service loans (PSLF). “Teacher loan forgiveness forgives up to $17,500 in federal Stafford loans to teach for 5 years at a low-income school. The PSLF forgives any remaining debt after 120 payments under an income-based repayment plan under the Direct Loan Program while working full-time in eligible public service employment or for a nonprofit organization. not-for-profit,” says Mark Kantrowitz, author of Who graduated from college? Who doesn’t?. Eligible jobs include working for a government agency such as a public school or a 501(c)(3) organization.
If your loans are part of the Federal Family Education Loan Program (FFELP), there is a limited PSLF waiver in effect until October 31, 2022 that allows payments on FFELP loans to count if the FFELP loans are consolidated into a federal direct consolidation loan and the borrower files a PSLF form using the PSLF Helper Tool at the deadline.
If you work in a Head Start program and have federal loans, Kantrowitz says those loans may also be eligible for a loan forgiveness program. “The Federal Perkins Loan Program ended in 2017-18, but loan forgiveness options are still available for ongoing Federal Perkins loans,” Kantrowitz says.
Although there is no student loan forgiveness program for military spouses, Anna Helhoski, student loan expert at NerdWallet, says an income-driven repayment plan is the best option for maintaining your payments to a manageable level because the amount you pay is tied to how much you earn. “If your earnings have changed since the last time you recertified your payment, be sure to update the amount you earn with your student loan officer. For a limited time, borrowers can self-certify over the phone,” says Helhoski. And at the end of your income-contingent repayment period, which lasts 20 or 25 years depending on your loans, any remaining amount would be paid off.
Have a question about getting out of a student loan or other debt? Email [email protected]
Understanding benefits for military spouses
Although there are loan forgiveness programs for members of the United States Armed Forces, not all of them are available to spouses, even when the service member is killed in action. “The Servicemembers Civil Relief Act (SCRA) provides certain benefits for loans made to members of the U.S. Armed Forces, including joint loans with their spouses, for the duration of their active duty plus one year. This includes a 6% cap on the interest rate, but those protections end when the member is killed in action,” Kantrowitz explains. And while there are some education benefits under the Post-9/11 GI Bill that can be transferred to a spouse or dependent, these benefits cover a portion of the cost of future education and cannot be used to repay student loans.
“There are, however, a variety of other benefits for survivors such as death benefit, survivor’s pension, Indemnity Dependency and Indemnity (DIC), Survivor benefit plan (SBP) and Educational assistance for dependents (DEA). These programs offer financial support, but do not waive student loans,” says Kantrowitz. The Survivor’s Pension is a tax-free benefit payable by the Department of Veterans Affairs to an unremarried low-income spouse and unmarried dependent children of a deceased wartime veteran. DIC is a tax-free monthly benefit paid to eligible survivors of service members who die in the line of duty; The SBP provides financial support to service spouses and children when a service member dies in service or after retirement; and DEA provides education and training to qualified dependents of veterans who are permanently and totally disabled due to a service-related condition or who died while on active duty as a result of a service-related condition. While these programs won’t help you get rid of student loans, they might help boost your income so it’s easier for you to pay them back.