Military Deferment – Hostility Area Principal Reduction

Military deferment is available for federal student loans if serving on active duty or if in the National Guard either deployed, or full-time and borrower’s service is during a time of war, military operation or national emergency.  

If so, borrower can defer monthly payments during active-duty (or full-time National Guard service), and for up to 180 days after leaving service.  

For borrowers with Perkins Loans there is another military-related benefit. A Perkins Loan is eligible for principal reduction for those who serve in “an area of hostility” for 365 consecutive days. 

 Generally, a borrower is serving in an area of hostility when receiving hostile fire/imminent danger pay, and to be eligible for principal reduction, borrower has to be serving in the hostile area for 365 days, continuously.  

If eligible, the loans will be reduced for each qualifying year and will be completely cancelled after five qualifying years. The five years don’t have to be continuous. Year-by-year, the borrower can expect that for their first and second years of eligibility 15 percent of the principal loan amount will be cancelled each year. 

 For the third and fourth years, 20 percent will be cancelled each year, and in the fifth year the final 30 percent will be cancelled.