Loan Repayment or Enlistment Bonus?

Navy Student Loan Repayment

September 19th, 2008

To be eligible for the Navy Student Loan Repayment Program (LRP) you must meet the following; You must be Non-Prior Service, a High School Diploma Graduate, get at least a 50QT on your ASVAB test and qualify for and enlist in one of the LRP qualifying ratings. Even if the job you select is eligible for an enlistment bonus you can not be given both – you must choose only one.

What student loans qualify? Existing education loans must meet all of the following requirements in order to qualify for repayment:
a. Must have been made towards your education.
b. Must qualify under part B, D, or E of Title IV of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq; 1087a et seq; 1087aa et seq). Unless you are actually listed as the student on Parent Loans for Undergraduate Students (PLUS), this type of loan is ineligible for repayment.
c. The loan must have been made after October 1, 1975 and before your active duty service date (date you go to boot camp).

The LRP application is complete when you select the LRP option during the classification process at the Military Entrance Processing Station (MEPS). You will provide all items on the LRP checklist your Recruiter will provide. Once all the items from the checklist are obtained MEPS will forward the information to the Commander Navy Recruiting Command LRP Coordinator (CNRC N5312) for final approval and enrollment into LRP. All these items must make it to CNRC N5312 within 60 days after entry into the Delayed Entry Program.

Understand this, you will be automatically disenrolled from LRP and forfeit all future loan repayments if any of the following occur:
a. The last payment has been made on loans submitted at initial enlistment (your loans are paid in full).
b. You receive a commission or warrant appointment (Your an Officer Now!).
c. You are discharged or released from active duty.

So, what is the benefits of LRP? The United States Navy will pay the lesser of the original loan amount or the unpaid principle balance at the time you ship off to Recruit Training Command (not to exceed $65,000). Any accrued interest, fines, penalties, or processing fees cannot be paid for by the Navy. Loan payments will be made directly to lender(s) in payments of 33 1/3 percent of the loan or $1,500 (whichever is greater) for each completed year of service. If the outstanding principle balance becomes less than 33 1/3 percent of the initial balance, the outstanding balance will be paid. The loan(s) must be in good standing to be eligible for repayment. According to the Internal Revenue Service (IRS), loan repayments are subject to federal and state taxes. Taxes will be withheld from your pay for the LRP payment amount and the amounts will be included in your W-2 form. The Navy will not refund any amount of the loan paid by other parties!

Enrollment in the LRP does not exempt you from all obligations associated with the repayment of the loan. Since the first LRP payment cannot be made until you have completed one year of service, you may choose to seek loan deferment or forbearance to prevent defaulting on loans. It is YOUR responsibility to secure deferment or forbearance on your loans and you must communicate such intentions directly to the lender.

Special stuff – If you do not complete your initial term of enlistment may qualify for prorated credit if you completed at least one full year of enlisted service. If you do receive a commission or warrant appointment or are selected to any pre-commissioning programs you lose your LRP eligibility. The Navy will prorate any eligible payment, the prorated amount is based on the number of years completed at the time of commissioning/appointment.

You may utilize the GI-Bill however, the law currently does not allow LRP participants to use GI-Bill benefits unless you enlist for a second term (and have served a minimum of 24 months of that second term). ***If you want the GI-Bill, you will have $100 per month deducted from your pay for the first year of enlistment. This amount is not refundable if you do not reenlist.***

Update: The new Post 911 GI-Bill does NOT have a $1200 ($100 per month) requirement.

Only you can determine if this program is right for you. Weigh your options and do the math! Some enlistment bonuses may bring the loans down to a manageable amount or may even cover the total.

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Read Comments (13)

13 Comments »

  • Why are W-2’s for Navy LRP not available on mypay, so when you actually file your taxes for a given year you can recoop the taxes paid by DFAS for the LRP paymnts?

    Comment by Jason Cirillo — October 4, 2008 @ 3:51 pm

  • @Jason

    The loan accounts remain in your name. You should be able to retrieve the information from the loan company on how much has been paid. The LRP money is part of your total income, much like a selective re-enlistment bonus would be.

    Comment by NCCM(ret) — October 4, 2008 @ 4:54 pm

  • SRB show in Mypay w-2. LRP does not.
    The creditor does have the paymnt history for the account but would unaware that any income tax has been witheld. For tax purpose , interest would be the only important factor the crediot would be privi- to.
    ??

    Comment by Jason Cirillo — October 6, 2008 @ 9:44 pm

  • Your LRP money is considered income and taxed at whatever rate you fall into. The money paid to your student loans, if eligible for deduction, would be deducted and figured on your tax form to produce your overall tax burden/refund.

    Depending on how much you make overall and how many deductions you have it may be a good idea to seek qualified tax help. You may find that because of your tax bracket you might get all your tax money paid back.

    Comment by NCCM(ret) — October 7, 2008 @ 1:10 pm

  • if you have the lrp ive been in for a year and a half with the new gi bill now can i get both and if i cant is there a way i can to cancel the lrp after two year in an get the gi bill benifits.

    Comment by gerrard — November 9, 2008 @ 1:43 pm

  • Am I right in assuming that I can take the amount that the Navy paid on my student loans for the previous year and add that to my W2’s to get my wages for the tax year? I was going to use this total in order ot file my taxes. I have not yet received this “supposed” W2 for my student loans yet. The mypay site says that they are available on the site, yet there is no where to go to print them out. I called mypay and they said that they would be mailed to me. I have not received them yet. Do you know the number I would call to speak with someone directly regarding the SLRP W2’s?

    Comment by Tim — January 27, 2009 @ 12:07 am

  • @Tim, personally I would wait for the W-2 – I do not know who to contact outside DFAS or your personnel department.

    Having never experienced it directly myself I would be interested to hear how this works out – Are you saying they are sending you two separate W-2s? One for normal pay and another for LRP?

    Comment by NCCM(ret) — January 27, 2009 @ 12:32 am

  • Yes, I am under the understanding that is what is going to be done. I’ve been trying to look up a contact number for CNRC in Millington, TN, because that is who handles LRP. Once I get things figured out, I will write back and let you know who this whole process worked out.

    Tim

    Comment by TIm — January 27, 2009 @ 3:38 pm

  • W-2’s for the LRP are sent by DFAS to the servicing PSD for the member. Your PSD should have received this by mid January no later than end of month. There is an updated contact email of: cnrc_lrp-eb[at]navy.mil that you can email for further questions. Again W-2’s concerning LRP payment are not posted on mypay, THEY ARE MAILED TO YOUR PSD.

    Comment by PS3(SW) BURY (1 comments.) — March 16, 2009 @ 10:42 pm

  • My son has about 50K of loans but they were from citibank (studentloan.com). They were student loans paid DIRECTLY to the university, but his recruiter said that they only pay off FEDERAL LOANS. is this correct?? THANKS!

    Comment by paul — July 15, 2009 @ 4:26 pm

  • As long as the loan falls under part Part B (Federal Family Education Loan Program), Part D (William D. Ford Federal Direct Loan Program), or Part E (Federal Perkins Loans) of Title IV of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq; 1087a et seq; 1087aa et seq).

    Your lender should be able to tell you which, if any, of these loan programs your son’s student loan may fall under.

    Comment by NCCM(ret) — July 15, 2009 @ 4:39 pm

  • Do you know if you are permanently disqualified from receiving the loan repayment option if you miss the deadline to get the documentation in. The Department of Education is the holder of my loans and they still haven’t mailed documents I sent out on December 7th (I went to MEPS on November 3rd and they told me I had 60 days. It took the Dept of Ed. about 3 weeks to send me my promissory note, then Thanksgiving intervened).

    If MEPS doesn’t have the documents by January 3rd, will I need to go back to MEPS and renegotiate my contract to see if I can get into another LRP qualifying rating? Will they allow me to do this?

    I know MEPS was closed for the holidays as well, is it possible they’ll extend my deadline?

    Thanks!

    Comment by TJP — December 28, 2009 @ 12:30 pm

  • Your recruiter will be able to supply a better answer to that question than I will TJP. I would think they will be somewhat lenient because of the holidays – make sure they are aware of the delays, don’t bring it up at the last minute. :)

    Comment by NCCM(ret) — December 28, 2009 @ 4:39 pm

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