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Navy Loan Repayment Program (NLRP), Explained

Navy Loan Repayment Program (NLRP), Explained
Sulaiman Abdur-Rahman
Sulaiman Abdur-RahmanUpdated August 9, 2023
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The United States Navy offers up to $65,000 in student loan repayment assistance to future sailors and prior service veterans who reenlist for active duty. The Navy Loan Repayment Program (NLRP) is a military student loan forgiveness program authorized under federal law.The Department of Defense Authorization Act of 1986 authorized education loan repayment programs for enlisted members in a military specialty. This empowers the Secretary of Defense to repay student loans through designated programs such as the NLRP.

What Is the Navy Student Loan Repayment Program? 

As mentioned above, the Navy Student Loan Repayment Program is a military student loan forgiveness program authorized under federal law. Navy student loan repayment can provide up to $65,000 in student loan repayment assistance to future sailors and military veterans who reenlist for active duty.Potential enlistees may ask, “Does the Navy pay off student loans?” or “Will the Navy pay off my student loans?” The Navy may not pay off your entire loan balance in full, but it may provide some student loan repayment assistance to eligible participants.

How Does the Navy Student Loan Repayment Program Work?

Below we highlight how Navy student loan repayment works: 

Which Student Loans Are Covered?

Virtually all federal student loans are covered by the Navy Loan Repayment Program. The NLRP may not cover private student loans. The difference between federal and private student loans is that federal student loans are provided, owned, or guaranteed by the U.S. Department of Education, whereas banks, credit unions, online lenders, and select state-based or state-affiliated organizations may offer private student loans not guaranteed by the federal government.

How Much Can Be Repaid?

The maximum loan repayment is $65,000. The Navy makes direct payments to your loan servicer, and the payments can be equal to 33.33% of your outstanding principal balance for each year of service.

Is It Considered Taxable Income?

Navy student loan forgiveness may be subject to state income taxes. The American Rescue Plan Act of 2021 excludes student loan forgiveness from federal income taxes for a limited time. If you receive student loan forgiveness in the years 2021 through 2025, you won’t have to pay federal income tax on the forgiven amount. The IRS previously considered Navy student loan forgiveness to be taxable income, and states may still consider NLRP forgiveness to be taxable income.

Does It Cover Interest?

The Navy Loan Repayment Program may not cover accrued interest or capitalized interest. The Secretary of Defense has broad authority to establish the terms and conditions for making loan repayments, so NLRP rules may change from time to time. 

Qualifying for the Navy Student Loan Repayment Program

You may have to meet the following requirements to qualify for Navy student loan repayment assistance:
  • Hold a high school diploma and qualifying student loan debt
  • Have an Armed Forces Qualification Test or AFQT aptitude test score of 50 or better
  • Enlist or reenlist for active duty with the Navy
  • Complete at least one year of service

Applying for the NLRP

Applicants may complete and submit the necessary paperwork to apply for Navy student loan forgiveness. Some of the necessary paperwork may include the following documents:
  • DD Form 2475 (Department of Defense Educational Loan Repayment Program annual application)
  • DD Form 4 and attached annexes (enlistment/reenlistment documents)
  • Loan Repayment Program (LRP) Worksheet
  • Copy of LRP Statement of Understanding
  • Copy of the promissory note on eligible loans
  • Copy of the signed Personalized Recruiting for Immediate and Delayed Enlistment (PRIDE) LRP text file

Other Student Loan Repayment Programs

Here are some additional student loan repayment programs highlighted below:

Public Service Loan Forgiveness (PSLF)

Public Service Loan Forgiveness is a federal student loan forgiveness program available to borrowers who work for a government agency or nonprofit organization. Members of the U.S. armed forces may be eligible for PSLF.Borrowers who qualify for PSLF may have the remaining balance on their federal student loans forgiven after making 120 qualifying monthly repayments.

Student Loan Forgiveness for Healthcare Workers

The Centers for Disease Control and Prevention operates an Educational Loan Repayment Program for Health Professionals that may provide up to $50,000 per year in student loan repayment assistance to eligible participants. Doctors, veterinarians, dentists, and other doctoral-level health professionals may qualify for ELRPHP funding in exchange for working in a CDC fellowship program.States may also offer student debt relief awards to health professionals. Such programs may require participants to provide primary care services to rural communities within the state in exchange for student loan repayment assistance.

Alternatives to Student Loan Repayment

Here are other ways to repay student loans:

Student Loan Refinancing

Student loan refinancing is a possible option for repaying education loan debt. How student loan refinancing works is that borrowers submit an application with a private lender requesting a new loan agreement for refinancing student loan debt.Refinancing federal student loans can allow borrowers to replace their existing federal loans with the terms and conditions of a private loan agreement. There are some advantages and disadvantages of refinancing a student loan. One of the advantages of refinancing student loans is it may provide you with a lower interest rate.One of the big disadvantages of refinancing student loans with a private lender, however, is you’ll be forfeiting federal benefits, including federal student loan forgiveness programs.Here are some additional factors you may want to consider:

Income-Driven Repayment (IDR) Plans

The U.S. Department of Education offers the following four income-driven repayment (IDR) plans to help borrowers pay down their federal student loan debt:Private student loans are not eligible for any federal repayment options, including IDR plans. Depending on your income and family size, all four IDR plans may offer a lower monthly payment compared with the Standard Repayment Plan.All IDR plans can end with a borrower’s outstanding balance being forgiven at the end of the repayment period. Forgiveness may come after 20 or 25 years under any of the IDR plans, but forgiveness may come earlier for eligible SAVE Plan enrollees who had original principal balances of $12,000 or less.Recommended: How to Pay Off Student Loans

The Takeaway

The Navy Loan Repayment Program is one of the student debt relief programs that may benefit future sailors and other eligible service members. The program has strict eligibility requirements, so ineligible service members may want to consider other student loan repayment options.If you’re interested in student loan refinancing, Lantern by SoFi can help. Refinancing might be right for you if you can lock in a lower interest rate. Find and compare student loan refinance options with Lantern.

Frequently Asked Questions

Does the Navy offer a student loan repayment program?
Will all your student loans be forgiven if you join the military?
How much money can the Navy student loan repayment program repay?
Photo credit: iStock/Rockaa

About the Author

Sulaiman Abdur-Rahman

Sulaiman Abdur-Rahman

Sulaiman Abdur-Rahman writes about personal loans, auto loans, student loans, and other personal finance topics for Lantern. He’s the recipient of more than 10 journalism awards and served as a New Jersey Society of Professional Journalists board member. An alumnus of the Philadelphia-based Temple University, Abdur-Rahman is a strong advocate of the First Amendment and freedom of speech.
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