How Does the College Loan Repayment Program (CLRP) Work?

The CLRP or Military College Loan Repayment Program provides an incentive for military service for college graduates. The program provides loan reimbursement based on years of service where the participating branch of the armed forces (i.e. Army, Navy, Air Force and Marine Corps) repays a portion of the college loan.  

Individuals participating in the program must have no prior service in the military and can not be an officer at the time they participate. There is a limit on the amount that is paid back, which is set by Congress. Within each of the branches, maximums are set, up to $30,000 in loan repayment incentives.

Loans Qualifying for Repayment

The loans provided to students for college that qualify for the CLRP are:

  • Auxiliary Loan Assistance for Students
  • Stafford Loan Program
  • Parents Loans for Undergraduate Students (PLUS)
  • Consolidated Loan Program
  • Federally Insured Student Loans (FISL)
  • Perkins Student Loan
  • Supplemental Loans for Students (SLS)

Eligibility Requirements and Payments

A student or graduate who enlists in the loan repayment program must not have prior military service. Additionally, the enlistee must remain enlisted for a minimum period of time of 3 or 4 years depending on the branch. For reservists, the period of enlistment must be 6 years.  Payments are made from the service unit directly to the lender after the enlistee has completed at least 1 year of service.

For enlistees who go on active duty, the military branch will pay an amount equal to the greater of 33 and 1/3 percent of the balance (up to the maximum amount allowed) or $1,500. Reservists receive an amount of 15 percent or $1,500 and members of the Air National Guard 15 percent or $5,000.

Taxable Income

The CLRP loan amount is taxable as income. A W-2 is issued by the military to the enlistee reflecting the amount withheld by from the loan payment. The amount withheld is taken from the top of the loan with the remaining amount being paid to the lender. This will mean that after the maximum amount has been paid by the military the remaining amount of the loan will still be the obligation of the enlistee. An enlistee must stay in good standing in order to continue to receive consideration under the CLRP.

The CLRP makes payments toward the unpaid principal balance of the loan and not any of the interest. The interest portion of the loan is the obligation of the enlistee and must be paid in order to keep the loan current.

Requesting a Deferment

It may be possible in some instances where an enlistee is in active duty to request a deferment of the loan. This deferment is at the discretion of the lender and must be requested at the time of the program’s entry. Further details regarding loan deferrals should be requested from the lender making the loan to the enlistee.

 


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