Wednesday, June 30, 2010

Summary of Loan Repayment Web Cast

Ok folks, there is ALOT of information in the web cast but most of it is legal gibberish I don't really understand so I will point out the 'stuff'' you likely care about. It's the information I find most valuable!!

Background information-there is what they call the Post 9/11 GI Bill. Basically after 10 years of service, military members are given up to $60,000 to use for college. It can be used by the spouse, military member, or children. It can be divided between them as well.

Now to move forward with the summary of the Loan Repayment Program.

1. Every year you decide to take the JAG loan repayment amount "that year of service will not apply towards the qualifying active duty service required for the Post 9/11 GI Bill Program." So if you choose to accept all 3 years of the loan payments, you will not qualify for the GI Bill until your 4th year as a JAG.

2. JAG's will not receive more than $65,000. Each annual payment will not exceed $21,666.67. (65 grand divided over 3 years). Nor will you receive the entire $65,000 if you only owe say $50,000 in educational loans.

3. To answer Jennifer's question, The Defense Finance and Accounting Service (DFAS) will pay the annual payment DIRECTLY to the JAG's educational loan lender.

4. DFAS will withold 28% of each loan payment for federal income taxes, reducing the amount the lender will receive. The JAG will also receive a w-2 or 1099 for the withholding. Thus the annual payment is taxed as income.

5. 28% of the annual payment of $21,666.67 is 6,066.67. Thus the amount paid to the lender will be $15,600 a year, if you choose to accept it each year.

I hope this answered your questions and gives you a better idea of how the loan repayment program will work. The JAG will be responsible for filling out paperwork each year and providing the necessary documents (unpaid loan amount etc.) to qualify for the money.


  1. Do you know if it will be paid at the beginning or end of each year? The change in principal would make a large difference in the interest due each month.

  2. One can apply for it after each completed year of service. Thus if you start in October you won't be eligible to apply for it until the following October. And who knows exactly how long it takes for the lender to then receive payment.

  3. I'm still confused! Does this mean they don't actually pay the full $65,000? Will they only pay $46,800? (That's what the $15,00 adds up to.)

  4. Over a 3 year period yes, the actual amount that will go directly to the loan is 46,800 but you won't pay any additional taxes b/c the Air Force withheld it for you.