Military Service: The SCRA and Student Debt

The Servicemembers Civil Relief Act (SCRA)

The SCRA mandates that interest on student loans obtained prior to military service is capped at 6% during periods of active duty. This applies to both federal and private student loans.

Even better, the Department of Education implemented a regulation that automatically applies a 0% interest rate to loans for members serving in areas of hostilities receiving special pay. No interest will accrue on your federal student loans for up to 60 months while you are in a combat zone.

Enforcing Your Rights

Since 2014, federal loan servicers are required to proactively check the Department of Defense's database and automatically apply the 6% cap. However, systemic failures occur constantly. Check your loan details online. If your interest rate reads above 6% while you are on active duty, submit a copy of your military orders to your servicer immediately and demand a retroactive adjustment.