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Loan Repayment
Frequently Asked Questions
Q1. How does the Loan Repayment Program (LRP) work? The guiding instruction for the LRP program is COMNAVCRUITCOMINST 1130.8H – Volume IV – CH1, Section 4 (LRP) beginning at 030401.
The Loan Repayment Program is one of several Navy enlistment education incentive programs designed to pay federally guaranteed student loans through 3 annual payments during a Sailor’s first three years of service. These loan repayments are subject to federal and state taxes. Additionally, the Navy does not pay accrued interest, penalties, or processing fees.
Q2. How does a Future Sailor enroll in the Loan Repayment Program (LRP)? Initial LRP applications are due via one .pdf scanned document to cnrc_lrp-eb@navy.mil.
For initial LRP applications, the MEPS classifier or Navy Recruiter is responsible for submitting six legible, completed documents via scanned document to the LRP Manager at cnrc_lrp-eb@navy.mil. As a reminder, forms are only good for 90 days after signature.
Scan the following six documents: - A copy of the Loan Repayment Program Worksheet (Rev. 8/2011) signed by both applicant and classifier. - A copy of the Enlistment Guarantee (NAVCRUIT 1133/52 Rev 06-2011) with LRP listed as a guarantee signed by both applicant and classifier. - A copy of the Statement of Understanding (SOU) (NAVCRUIT 1133/75 Rev. 4-2012) signed by both recruit and recruiter. - A copy of the PRIDE system LRP text file printed out and signed by both recruit and classifier. - A copy of the DD FORM 2475 (Rev. Jan 2012), filled out by the lender for each loan. The DD FORM 2475 has four sections. Section 1 is to be filled out by the recruit and signed by the command representative/recruiter in block 1 (b) (2). The Future Sailor’s address should be put into block 1 (a). Sections 2 and 3 should be filled out by the Future Sailor, ensuring all information is accurate and legible. Any errors may delay processing or payment. If there are any questions, please call the lender to ensure accuracy. Section 4 is filled out by the lender. The lender should return the form to the address listed in Part 1, block 1 (a). - A copy of the lender’s promissory note for each loan. Note: Those personnel with consolidated loans are required to submit an additional itemized list of loans, lenders, amounts, and loan types before LRP application approval.
This following link will show you how to correctly fill out the application. Sample LRP Package
Q3. How much time does an applicant have to submit a LRP package? All packages should be submitted within 60 days of entering into the Delayed Entry Program (DEP). If the applicant is within 60 days of entering DEP and has already submitted a package, please allow 3 working days for processing. Application rejections will be returned via email. The LRP manager does not keep residual files for rejected packages. If the package is rejected, another complete and corrected LRP package must be resent. If you have waited three working days, and have not received a rejection or an LRP approval in the PRIDE system, call 901-874-9283/9397.
If the applicant has been in DEP for longer than 60 days or is within 70 days of ship date, an Exception to Policy (ETP) (NAVCRUIT 1133/103 Rev. 02-10) form must be completed and signed by the Commanding Officer of the Recruiting Station. This form must accompany the forms above when submitting an initial package.
Q4. What loans qualify for repayment under the Loan Repayment Program? Loans which qualify for the LRP include those which are made, insured, or guaranteed under Part B (Federal Family Education Loan Program); Part D (William D. Ford Direct Loan Program); or Part E (Federal Perkins Loans) of the Higher Education Act of 1965. The loans also must have been acquired prior to entry on active duty. The types of loans that qualify for the LRP are:
Different lenders call consolidated loans different names. For example, Sallie Mae will call the loan type SMART; CITIBANK will call the loan type LCS or LCP, and NELNET uses GSL. If Federally Consolidated Loans include PLUS loans in the consolidation, the individual promissory notes for the PLUS loan must be provided. All of these eligible loans are part of the Federal Family Education Loan Program (FFELP). If you are unsure about the loan type or name, please contact your lender for clarification on loan eligibility.
Q5. What are the names of non-qualifying loans? Non-qualifying loans are credit based. These include Signature, Private, Alternative, etc.
Q6. What if I do not know where my loans are or who the current loan holder is? The U. S. Department of Education can help you track your student loans as well as obtain copies of your promissory notes. You can reach them at 1-800-433-3243 or go to www.nslds.ed.gov.
Q7. How much will be repaid on my student loans? Under LRP, the Navy will repay 33 1/3 percent or $1,500, whichever amount is greater, on the total remaining original unpaid principal balance, after each completed year of active duty up to $65,000.
Q8. Are defaulted loans eligible for payment under the Loan Repayment Program? The Navy will not repay loans or portions of loans in default, delinquent payments, interest, or associated charges.
Q9. What is a loan deferment or forbearance and how do I obtain one? In some cases, a student loan deferment will stop interest from accruing (which the Navy will not repay under LRP).
Forbearance will stop payments from coming due on a student loan; however interest will continue to accrue. As of 1 July 1995, in accordance with the Federal Register (34 CFR682.211 (h) (ii) (B), Mandatory Forbearances), loan holders are required to forbear any and all student loans that are on student Loan Repayment Programs administered by the Department of Defense (U.S. Code Title 10, Section 2171).
It is, however, the borrower's responsibility to promptly contact the loan holder and apprise the agency of one's active duty status and officially initiate the request for forbearance. A deferment or forbearance will prevent a loan from going into a state of delinquency or default. If a loan holder is requiring the borrower to begin making repayments, then it is the borrower's responsibility to officially request either deferment or forbearance.
Conditions under which a deferment or forbearance are obtained are handled exclusively between the borrower and the loan holder. It is always the borrower's responsibility to initiate the official request and then to ensure that the deferment or forbearance has been obtained. Paperwork for deferment or forbearance must be obtained from the lender and the recruit must ensure the paperwork is taken care of and is kept up-to-date.
The Navy never assumes the responsibility of your loan. The individual remains responsible for payment and the status of the loan. Public Law 99-145, Section 671(a) (1), precludes the authorization of payments toward interest. Likewise, reimbursement of payments already made is prohibited.
Q10. How does a Sailor receive annual payments to their lender(s)? LRP payments are not an automatic process. Service members must submit annual applications. Payments are triggered by the service member submitting an annual updated DD FORM 2475. Once the LRP Manager has the updated DD 2475(s) for the year, a paper check (less federal and state income tax) will be submitted to the lender by DFAS.
Annual payments are made to lenders at the 1, 2, and 3 year mark of a Sailor's enlistment. On or within 60 days before the anniversary date (date member ships to RTC), the Sailor should complete the following:
DD FORM 2475 (Rev. Jan 2012)
Annual payments are made after the LRP manager receives a current copy of the DD FORM 2475. The DD FORM 2475 can be found on the internet by typing in DD space 2475 into any search engine. You can also obtain the form by clicking on the DD FORM 2475 link provided above.
The Sailor will have Section 1 completed and signed by his/her command representative (LCPO/DIVO, ESO, etc). Sections 2 and 3 will be filled out by the Sailor, ensuring all information is current and legible. The DD FORM 2475 must then be sent to each lender who will complete section 4. The lender(s) will return the form to the address in Section 1a of the DD FORM 2475. Sometimes, the lender will send the forms directly to the LRP Manager. The LRP Manager will make every effort to send an email to the address provided in Section 2e of the form to let the Sailor know the forms have been received. When the Sailor receives the completed form from the lender(s), the Sailor will then scan and email the completed form(s) in one .pdf file to the LRP Manager at CNRC_LRP-EB@navy.mil. Forms are only good for 90 days after the lender(s) sign(s) the form. Upon receipt of your completed annual DD form 2475, the LRP Manager will process a payment to DFAS for approval. It will take DFAS up to 75 days to process the request and submit a check to the lender(s).
In some instances, a lender may sell a loan to another lender or the Sailor may consolidate their loans into one. When this happens, the Sailor will need to submit the new Promissory Note or letter from the lender with the annual DD FORM 2475. A promissory note is only required when the loan information has changed from one year to the next.
It is suggested that scanned documents be sent via email to the LRP Manager the month before the anniversary date. This will ensure timely processing and DFAS payment as soon as possible after your anniversary date. If there are any errors on the DD FORM 2475, it will be promptly returned for correction to the email address provided in Section 2e.
If a lender has not received the annual payment after 75 days from the end of the anniversary month, please call the LRP Manager at 901-874-9283/9397.
Q11. Are payments considered taxable income? Payments made under the LRP are considered by the IRS as taxable income in the year they are paid. Service members whose lenders have received a payment will receive a W-2 from DFAS sent to your Finance Center (PSD). It will not be identified on your regular base pay W-2 and you cannot get them on the MYPAY website. Approximately 25-30% of the LRP payment will be withheld for taxes, so it is important that you file your income taxes with the LRP W-2. Since payments are considered as income, this withholding will avoid you facing a large tax bill at the end of the year. In general, you will receive a refund from the IRS that will allow you to pay off the remaining loan balance as per your initial LRP application.
For example, $2,500 will be withheld from a $10,000 payment. Potentially you may get this money back from the IRS and make an additional payment on your student loans.
A separate Statement of Amount Paid (W-2) is sent to the individual's command at tax year-end by Defense Finance and Accounting Services (DFAS) - Indianapolis Center. If the W-2 has not been received by February 1st of the following year a payment was made, send an email to the LRP Manager who will work with DFAS to get a duplicate W-2 mailed to you. Provide your full social security number and a mailing address when emailing the LRP Manager.
Q12. Will the Navy pay off all of my student loan? The NAVY will only repay the remaining original (verified) unpaid principal on qualifying loan(s) up to $65,000. Interest (even if it has been re-capitalized into principal) will not be repaid. Furthermore, you will not be reimbursed for any payments you have already made on your loans.
If a LRP participant does not fulfill his/her enlistment obligation, by separating from the service early, then he/she will forfeit/ lose his/her eligibility for LRP. There are some exceptions to this early separation rule. Individuals who separate early, but only after completing at least one year on active duty, may be eligible for prorated LRP payments if the reason for separation was for physical disability, hardship or for certain convenience of the government discharges (e.g., to enroll in Officer’s Candidate’s School or a Service Academy). In all cases of early separation, LRP participants must provide the LRP Manager with a copy of their DD Form 214 (Member 4 Copy), which is their discharge paperwork. The DD 214 will be reviewed in order to determine if further or prorated repayment would be authorized. LRP Managers do not sign DD FORM 2475s, handle deferments, forbearance, or contact lenders.
Q13. Will I lose my
Student Loan Repayment Program (SLRP) benefit if I accept an
Officer program?
Q15. What do I do when the lender has not received a payment after 75 days? In some instances, a lender may not receive a payment from DFAS. When this happens, the LENDER should send the DFAS Accounting Department a fax stating that they did not receive the check which left DFAS on (date by DFAS). They should include the following information:
THIS DATA CAN BE OBTAINED BY DFAS INDIANAPOLIS AT: 888-332-7411. 1) Payment Amount less taxes: Payment Authorized = (i.e. $20,000) Less Federal/State Taxes = (i.e. $5,000) Amount Sent to Lender = (i.e. $15,000) 2) Check number: i.e.123456789 3) Voucher number: i.e. 12345
This request should be faxed to 216-522-5898. The request should be signed by a responsible party from the loan agency. The Sailor can also request the information from DFAS. They will follow the same guidelines as a lender. Once this fax is received, DFAS Accounting Department will send the information to the Treasury Department in order to determine if the check was cashed. If it was, they will send a photocopy of the check to the loan institution.
If it was not cashed, DFAS Accounting Department will reissue the check to the loan agency.
Q16. How does the LRP Program affect my GI Bill? Once you serve three years of active duty, you have completed your payback for LRP. You will then have to serve another three years in order to qualify for 100% of the GI benefit. You can contact the Veteran’s Affairs if you have additional questions or concerns regarding your benefits.
Q17. How does a Sailor dis-enroll from the LRP? For recruits that have not gone to boot camp yet, you must formally request disenrollment from the MEPS classifier using a disenrollment form. Your MEPS classifier will provide you the form. Once completed, this form will be sent to the LRP Manager for retention. This form may also be kept locally at the MEPS that processed you for a period of two years.
For Sailors with LRP as a guarantee and already on active duty, disenrollment occurs after the final payment, or when you leave the Navy, become a commissioned officer, or want to switch to either of the GI Bills before completing your first duty assignment. Call us at 901-874-9283/9397 or email at cnrc_lrp-eb@navy.mil for questions. If you want to use the GI Bill and have not received any annual installments, you will need to submit a DD 149 to the Board of Correction of Naval Records (BCNR). Go to BCNR for instructions on how to submit a package to the Board.
Q18. How do I contact the Loan Repayment Program Manager? The Loan Repayment Program Manager at Navy Recruiting Command (NRC) is responsible for administering the LRP and answering any questions on LRP policy and procedures. Here are the ways to contact the LRP manager:
NAVY RECRUITING COMMAND Attn: LRP (Code N321) 5722 Integrity Drive, Bldg. 784 Millington, Tenn. 38054 EMAIL: CNRC_LRP-EB@NAVY.MIL PHONE: 901-874-9283/9397 1-877-747-7657 |
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