How Does VA Student Loan Forgiveness Work? Repayment Program

Here in this blog post, you will find every detail about how Va student loan forgiveness works, including the program, and requirements.

For a long time, the Department of Veterans Affairs (VA) has been in charge of the Education Debt Reduction Program (EDRP). 

The amount that borrowers might get under this VA loan forgiveness program was altered by Congress in 2018 nevertheless. 

Any medical practitioners who are committed to serving veterans should take into account these additional regulations when deciding whether to participate in this program. 

The whole information on VA loan forgiveness is provided below.

See Also: How Does Student Loan Forgiveness Private Loans Work? Repayment Program

What is the VA EDRP?

The EDRP application procedure is created to find qualified healthcare professionals for direct patient care positions that are challenging to fill. 

A list of jobs that qualify for the EDRP is published by the VA. 

Search “EDRP” on USAJobs.gov or VAcareers.va.gov to identify jobs that are EDRP-eligible. 

You should bring up the VA student loan repayment program with the human resources department during your contract talks if you are applying for a VA position specifically because of it. 

Your final employment offer will mention the EDRP if your position qualifies.

You must obtain a degree from a recognized school or program in addition to holding a qualifying job. 

The program accepts federal or private loans, but your educational debt must also be for a degree that ties to your line of work. 

Last but not least, you’ll need to keep up a respectable standard of performance throughout your EDRP service tenure.

Also See: How Does Student Loan Forgiveness in Michigan Work? Repayment Program

What are the Program Changes?

Congress amended the VA EDRP maximum award in 2018 to reflect this. 

Prior to the modification, the maximum compensation was $120,000 cumulatively over a five-year period. 

The yearly cap, however, was raised from $24,000 to $40,000 per year. 

As a result, participants in this VA student loan repayment program may now receive up to $200,000 over the course of five years.

Also, See: How to remove a Student Loan from Credit Report

Program fees are not Subject to Taxes

The fact that this VA student loan forgiveness program won’t trigger an IRS taxable event is one of its many wonderful features. 

That’s a major benefit. The residual sum that is forgiven under several schemes, including income-driven repayment (IDR) forgiveness, is regarded as taxable income. 

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Consider receiving the entire $200,000 maximum from this VA student loan payback scheme to see why the EDRP’s tax-exempt status is so important. 

Notably, this translates to an additional $40,000 in taxable income per year. 

If you were in the 25% tax rate, your five-year tax bill may increase by an additional $10,000.

One thing to bear in mind is that certain hospitals might provide their own tax-deductible student loan repayment plans. 

These employer-based initiatives should probably be avoided if you are accepted into the EDRP. 

This is why: 

Assume you owe $120,000 in student loans and that your employer provides $20,000 in annual student loan payback. 

You might pay off your debts faster by combining the EDRP with your employer’s program, doing so in two years as opposed to three. 

However, you would also earn $40,000 in taxed income.

When you may have access to tax-free money tomorrow, why would you utilize taxed money today? 

The VA EDRP is one of the best forgiveness programs accessible because the reimbursements are tax-free. 

Given that you don’t have to wait 10 years for forgiveness, it might even be preferable to the Public Service Loan Forgiveness program in some situations. 

Additionally, although EDRP is only open to holders of private student loans, PSLF is only eligible for borrowers of Direct Loans.

Read More: Who Offers Student Loan Forgiveness Waiver?

Is it Worthwhile to Combine the VA EDRP and PSLF?

VA positions in the healthcare sector do count as public service under PSLF. 

The VA EDRP and PSLF can be pursued together in the majority of cases. 

However, there are a few considerations. 

The VA EDRP is a reimbursement program, that much is clear. 

Only payments made toward your student loans may be reimbursed. 

Second, it’s crucial to keep in mind that as soon as a medical professional begins residency, they can start making qualifying contributions toward PSLF. 

These two facts are significant because, if you start PSLF as soon as you begin your residency, you might have fewer than five years left when you begin your VA position.

You’re free to request VA EDRP reimbursement for your IDR payments in that situation. 

However, you most likely wouldn’t want to raise the amount of your monthly federal student loan payment. Why? 

Because if you make additional payments over what your IDR plan specifies, you run the danger of having your loan marked as “paid ahead.” 

Additionally, this may cause issues for PSLF. 

If you’re going to receive complete, tax-free forgiveness through the PSLF in less than five years anyway, there’s really no reason to put yourself in that kind of danger.

Also Check: Maine Student Loan Forgiveness Programs | Learn How to Apply

What are Additional VA Loan Forgiveness Initiatives

The VA has more student loan forgiveness programs besides EDRP. 

For qualified VA employees, the VA Student Loan Repayment Program (SLRP) gives up to $10,000 per year ($ 60,000-lifetime maximum) in student loan repayment. 

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Additionally, more VA employees might be eligible for SLRP while EDRP is only open to medical professionals who work in direct care positions that are difficult to fill. 

Some readers might be surprised to learn that you don’t actually need to be in the military to be eligible for one of the aforementioned VA student loan forgiveness programs. 

Military personnel, however, also have access to a number of student loan relief options. Here are a few illustrations:

  • Total and Permanent Disability Discharge(TPD). Veterans who can substantiate their impairment may be eligible for TPD release. The supporting evidence must demonstrate that the individual is either (1) fully handicapped due to a service-related disability or (2) has received an individual unemployability rating. Veterans’ TPD discharge procedures were eased in 2019 under the previous President Trump. 
  • Military College Loan Repayment Program(CLRP). New military recruits are eligible to receive up to $65,000 in student debt repayment aid through the CLRP program.
  • National Defense Student Loan Discharge: You can be eligible to have your federal Perkins Loan debt is forgiven if you had debt when you served for at least a year on active duty in an area under hostile fire. 
  • Public Service Loan Forgiveness(PSLF). As long as they are on active service, military personnel is able to join PSLF. Only if you intend to serve numerous terms will this be a viable alternative, as it takes at least 120 eligible monthly payments (10 years) to earn PSLF forgiveness.

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VA EDRP: An Excellent Choice for VA Healthcare Professionals

Among the current VA student loan repayment options, the EDRP is one of the most generous. 

Up to $200,000 in tax-free loan payback could be yours if you can locate a job that is EDRP-eligible. 

Furthermore, it’s possible that you might simultaneously pursue the VA EDRP and PSLF.

Repaying Your Student Loan

You might be qualified for up to $10,000 per year, with a lifetime limit of $60,000, through the VA Student Loan Repayment Program to assist you in paying back your student debts.

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Reimbursement For Tuition

For medical school or student loan repayment, employees may be eligible for financial prizes. 

The Employee Incentive Scholarship Program or the Education Reduction Repayment Program may be able to help with the cost of continuing your medical education, whether you’re a doctor, dietician, or medical records technician. 

All or a portion of the costs associated with job-related training can be covered by VA by way of payment or reimbursement to the employee. 

This also covers the cost of the course fee, books, materials, and travel.

Through, Scholarship Program for Employee Incentives (EISP), get a scholarship to study or train in a field of health care where it is hard to attract and keep qualified people. 

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To be eligible, you must have had a full-time VA post for one to three years. 

Plan for Reducing Student Loan Debt (ERRP) Obtain a VA loan of up to $45,364 to lower your debt. 

To be eligible, you must be hired for a position that offers direct patient care services or services that are incidental to delivering direct patient care.

Editor’s Pick: Maryland Student Loan Forgiveness Programs | Loan Repayment Programs

Refinance your Student Loans for a Lower Interest Rate

Refinancing your student loans is a practical approach to reducing your debt, whether you’re a civilian or a member of the armed forces. 

Refinancing is the procedure for repaying one or more student loans with a new, single loan from a private lender. 

Also, refinancing covers both federal and personal loans, unlike the military loan repayment aid program. 

Typically, the objective is to obtain a reduced interest rate on the new loan and, as a result, take advantage of fewer monthly payments. 

Additionally, this action may result in interest fee savings. 

Moreover, you might be able to lengthen your payback time to further reduce your monthly payments. 

However, this might negate any interest savings that were made.

It’s crucial to remember that refinancing isn’t a miracle fix for your financial issues and that not all borrowers should consider it. 

Consideration should be given to a number of significant benefits and drawbacks, particularly when refinancing federal student loans. 

For instance, if federal loans are refinanced with a private lender, the borrower will no longer be eligible for government-backed perks like the Public Service Loan Forgiveness Program and repayment plans based on income. 

However, refinancing could be the solution to lowering the cost of that debt if you have a number of high-interest loans or private loans, don’t qualify for income-driven payments, or both.

Veterans and Service Members are Eligible for Student Loan Relief

On and off the battlefield, carrying student loan debt shouldn’t be a burden. 

Veterans and active duty personnel are eligible for incentives, benefits, and school debt forgiveness from the government. 

You might significantly reduce your student loan debt and possibly even eliminate it entirely by looking into your options for military student loan forgiveness and aid.

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Conclusion 

In conclusion, you can qualify for special privileges when it comes to paying back your student loans if you are a veteran of the military. 

You might be qualified for loan forgiveness through PSLF or other programs, as well as loan repayment assistance programs like the EDRP. 

To find out if you qualify or where to begin the application process, get in touch with the VA or your neighborhood VA clinic.

References

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