College Loan Repayment Program (CLRP)

The College Loan Repayment Program (CLRP) is an enlistment incentive that pays up to $65,000 of eligible student loans for non-prior service enlistees. Just as with any other enlistment incentive, it must be stated on your enlistment contract or you will not receive it. Furthermore, the college loan repayment program is only offered for military occupational specialties (MOS) that are suffering shortages or deemed a critical MOS.

The complete eligibility criteria:

  • No Prior Service
  • Must decline enrollment in the GI Bill (Montgomery AND Post 9/11) using DD form 2366
  • Hold a high school diploma (No GED equivalent)
  • Scored 50 or higher on the Armed Forces Qualification Test (main score from the ASVAB)
  • Enlist in an MOS eligible for the College Loan Repayment Program at the time of enlistment
  • Have a student loan made, insured, or guaranteed under Higher Education Act of 1965, Title IV, Part B, D, or E prior to entering active duty.

College Loan Repayment Program and the GI Bill

Pay particular attention to the bolded criteria above. The college loan repayment program is an excellent benefit but you may wish to forego the loan repayment program if you plan on going back to college again in the future since you give up your ability to use either the Montgomery GI Bill or the Post 9/11 GI Bill. This is due to a Federal Law prohibiting the VA from paying out for the loan repayment program and the GI Bill for the same enlistment period. The only way to receive the college loan repayment program and the GI Bill entitlement is to enlist with the college loan repayment program on your enlistment contract, then request the GI Bill on your re-enlistment contract in the future.

Eligible Military Occupational Specialties until 1 April 2012 (early supersession possible)

The MOSs currently eligible for the Army College Fund are separated into levels 2-5 for payout classification. Levels 2 and 3 still receive an enlistment bonus as well as the college loan repayment program but the bonus is halved (or more). Level 1 is the highest priority MOSs that need filling so the enlistment bonuses on offer go down in value as you go from level 1 to 2, level 2 to 3, etc. Ultimately, the most enlistment bonus money you can sacrifice by choosing the loan repayment program is $8,000 for a 6 year enlistment in a level 2 MOS, $4,000 for a 6 year commitment in a level 3 MOS, or $6,000 for a level 4 MOS. Level 5 MOSs only offer the loan repayment program to begin with.

Visit the enlistment bonuses by MOS page for details on enlistment bonus payouts with and without the CLRP.

College Loan Repayment Program Payout

The first payment will not be made to the lender until the soldier completes 1 year of service. At that time, the Army will pay 33.3 percent of the outstanding original principle balance annually for active duty soldiers, or $1,500, whichever is the greater amount, up to a maximum total payout of $65,000. The Army Reserves will pay 15 percent of the original principle balance annually or $1,500, whichever is greater. Note that interest is not covered under the program. The soldier remains responsible for their student loan; the Army does not assume the loan.

Eligible Student Loans

  • Supplemental Loans for Students - SLS
  • Stafford Loans
  • Parent Loans for Undergraduate Students - PLUS
  • Perkins Loans
  • William D. Ford Loans
  • Consolidated Loans (only for education)

Ineligible Student Loans

Private, State Funded, Equity, or Institution Loans do not qualify for repayment under the College Loan Repayment Program. Again, the student loans must be covered under the Higher Education Act of 1965, Title IV, Part B, D, and E. If you're not sure if your student loan qualifies, visit the National Council of Higher Education Loan Programs and download Title IV of the Higher Education Act of 1965. Also, student loans that are in default will not be paid according to Army Regulation (AR) 621-1 and 621-202.

Tax Treatment

Payments made to the student's lendor are taxed by the IRS. For example, if you have $10,000 of student loans and the Army is paying 33.3 percent on the anniversary of your first enlistment, the Army is slated to pay $3,333.33. However, the Army will deduct 28% of that amount and send it to the IRS with the lendor receiving $2,400. Those serving in a combat zone during any portion of a year considered a year of repayment under the loan repayment program are eligible for tax-free treatment for the months deployed. Soldiers must be diligent if they fall under this category as the Army may not factor in months deployed when making payments for the loan repayment program. Such matters must be worked out with the local finance office on-post if you believe payment was made in error.

Loan Interest and Student Loan Deferments

As mentioned above, the College Loan Repayment Program will not pay interest on student loans. However, your lending institution may defer payments on your student loan while on active duty. Some student loans, such as subsidized Stafford and Federal Perkins loans may be exempt from interest charges during deferment. Talk to your lending institution to see if your student loan qualifies for deferment while on active duty and if interest will continue to accumulate during deferment.

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Article Last Modified: May 10, 2011

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