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Everything You Need to Know About VA Student Loan Forgiveness

The Education Debt Reduction Program (EDRP), administered by the Department of Veterans Affairs (VA), has been around for quite some time. But in 2018, Congress changed the amount that borrowers could receive for this VA loan forgiveness program.

These new rules have made this program worth considering for any medical professionals who are passionate about helping veterans. Here’s everything you need to know about VA loan forgiveness and how it interacts with other federal forgiveness programs.

What is the VA EDRP?

The EDRP application process is designed to recruit quality healthcare workers for difficult-to-recruit, direct patient care positions. The VA publishes a list of positions that are eligible for the EDRP. To find EDRP-eligible jobs, search “EDRP” on VAcareers.va.gov or USAJobs.gov.

If you’re applying for a VA position specifically because of this VA student loan repayment program, you’ll want to ask the human resources department about it during your contract negotiations. If your job is eligible for the EDRP, it'll be included in your final employment offer.

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In addition to working in a qualifying position, you’ll need to earn a degree from an accredited school or program. Your education debt also must be for a degree that relates to your job, but the program allows federal or private loans. Finally, you’ll have to maintain an acceptable level of performance during your EDRP service period.

Related: The Complete Guide to Medical School Loan Repayment and Forgiveness

Changes in the program

In 2018, Congress changed the max you could receive with the VA EDRP. Before the change, the most you could get was $120,000 cumulatively over five years.

But the annual limit was increased from $24,000 to $40,000 per year. This means participants can now receive up to $200,000 for a five-year period with this VA student loan repayment program.

Program payments are tax-exempt

One of the great things about this VA student loan forgiveness program is that it won't create a taxable event with the IRS. That's a huge plus. With many programs, including income-driven repayment (IDR) forgiveness, the remaining balance that's forgiven is considered taxable income.

To demonstrate why the EDRP’s tax-exempt status is such a big deal, imagine that you received the full $200,000 limit from this VA student loan repayment program. That would work out to an extra $40,000 of taxable income each year. If you were in the 25% tax bracket, that could add an extra $10,000 to your tax bill for each of the five years.

One thing to keep in mind is that some hospitals might offer their own student loan repayment programs that are taxable. If you’re accepted into the EDRP, you should probably avoid these employer-based programs.

Here’s why:

Let’s say you have $120,000 in student loans, and your employer offers $20,000 of student loan repayment per year. By combining your employer’s program with the EDRP, you could pay off your loans in two years instead of three. But you’d also generate $40,000 of taxable income. Why use taxable money today when you could get your hands on tax-free money tomorrow?

The fact that the VA EDRP reimbursements are tax-free honestly makes it one of the best forgiveness programs available. In fact, it could be better than the Public Service Loan Forgiveness program in some circumstances, since you don’t have to wait 10 years to receive forgiveness. And although PSLF is only available for Direct Loans, private student loan borrowers can qualify for EDRP too.

But what if you could participate in the VA EDRP and PSLF at the same time? Let’s take a look at when — and if — that would be a smart student loan repayment strategy.

Is it worth it to use the VA EDRP and PSLF together?

Health care VA jobs do qualify as public service for PSLF. In most cases, it can make sense to pursue both the VA EDRP and PSLF at the same time. But there are a couple of things to keep in mind.

First, note that the VA EDRP is a reimbursement program. You can only receive reimbursements for student loan payments that you make. Second, it’s important to remember that medical professionals can begin making qualifying payments toward PSLF as soon as they begin residency.

Here’s why those two facts matter:

If you begin PSLF as soon as you start residency, you might have less than five years remaining by the time you start your VA job. In that case, you’re welcome to apply for VA EDRP reimbursement for your IDR payments.

But you probably wouldn’t want to increase your monthly payment amount toward your federal student loans. Why? Because if you pay more than your IDR plan requires, you could risk having your loan placed in “paid ahead” status. And that can present problems for PSLF, even though the Biden administration is working on fixes to the “paid ahead” problem.

Other VA loan forgiveness programs

EDRP isn't the only student loan forgiveness program offered by the VA. The VA Student Loan Repayment Program (SLRP) offers up to $10,000 per year ($60,000 lifetime maximum) of student loan repayment for qualifying VA employees. And while EDRP is only available to medical professionals who work in hard-to-fill direct care positions, more VA workers may be able to qualify for SLRP.

It may come as a surprise to some readers that you don't actually have to be in the military to qualify for either of the VA student loan forgiveness programs listed above. However, military service members have several student loan relief options too.

Here are a few examples:

  • Total and Permanent Disability Discharge (TPD). Disabled veterans can qualify for TPD discharge by verifying the VA’s disability determination. The documentation must show that they: (1) have a service-related disability that is 100% disabling, or (2) have been deemed totally disabled by an individual unemployability rating. In 2019, former President Trump streamlined the TPD discharge process for veterans.
  • Military College Loan Repayment Program (CLRP). Through the CLRP program, new military recruits can receive up to $65,000 in student loan repayment assistance.
  • National Defense Student Loan Discharge. If you have federal Perkins loan debt and spent at least a year of active-duty service in an area of hostile fire, you may qualify to have your Perkins Loans discharged.
  • Public Service Loan Forgiveness (PSLF). Military members are eligible to join PSLF as long as they're serving on active duty. Since it takes at least 120 qualifying monthly payments (10 years) to earn PSLF forgiveness, this will only be a viable option if you plan to serve multiple terms.

The above list is by no means exhaustive. For a full breakdown of all your options, see our complete military student loan forgiveness guide.

VA EDRP: A great option for VA medical professionals

The VA EDRP is one of the most generous VA student loan repayment programs available today.

If you’re able to find a job that qualifies for the EDRP, it could earn you up to $200,000 of tax-free loan repayment. And you may even be able to pursue the VA EDRP and PSLF at the same time.

Looking for more student loan debt advice and ideas? You may want to consider setting up a consult with one of our expert student loan consultants. Book a consultation today.

Not sure what to do with your student loans?

Take our 11 question quiz to get a personalized recommendation for 2024 on whether you should pursue PSLF, Biden’s New IDR plan, or refinancing (including the one lender we think could give you the best rate).

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Comments

  1. Danaya September 19, 2019 at 3:21 PM
    Reply

    Does the VA EDRP work for refinanced loans, or just federal laons?

  2. Cajun October 10, 2019 at 12:34 AM
    Reply

    “ Because if you pay more than your IDR plan requires, you could risk having your loan placed in “paid ahead” status. And that can present problems for PSLF.”

    Actually, you should aim to pay the full 24k or 40,000k during your service period if that’s what your yearly EDRP award is under the new Mission Act EDRP upgrade.
    Let’s Say you are on IDR or PAYE and your monthly payment is $300. Pay that via direct debit each month. 11 months of that would be $3300 so you still have $20,700 or $36,700 In payments towards loans you can make for that service period and get reimbursed. $24k if you were an EDRP prior to October 2018 and likely $40k if you’re EDRP paperwork was after October 2018. Check your documents.

    I suggest this. When you get about 2-3 months from the end of EDRP service period #1 and your first year of federal employment, go ahead and calculate a one time bolus check that you can write to Fedloan or whoever your loan servicer is.

    Ensure that you tell PSLF/Fedloan/your servicer that you DO NOT want pay ahead status. Whatever you do, DO NOT fail to continue making your normal monthly student loan payment. That way they still count for PSLF. When you make a large bolus payment the system tries to “trick you” that you’re good on payments for a while but that is VERY WRONG. It’s the most idiotic glitch meant to screw you over and everyone deals with this.

    You must discuss w Fedloan or PSLF and express that they mark you don’t want pay ahead status on your account . When you approach one month before end of service period #1, double check all your math.

    Your aim should be to make a series of payments throughout the year to pay the full amount so that you can be refunded the full amount tax free.

    Don’t mess up your service period dates. LWOP, AWOL etc will all extend your service period so try not to take those types of leave. Also ensure good standing on reviews.

    Side note, to those who don’t have it yet, ensure EDRP is listed on your TJO and FJO when you are trying to get a VA job. Ensure your position qualifies and states that on vaJobs.gov

    • Travis at Student Loan Planner October 30, 2019 at 4:12 PM
      Reply

      This is great info thanks for sharing!

      • Cajun November 20, 2019 at 11:50 AM
        Reply

        No worries. Happy to answer any other questions on it if anyone has Qs.

    • Patty December 12, 2020 at 9:18 AM
      Reply

      I am new to this and I applied for only 10000 a year and they want to give me 14000. My question is do I have to use the full amount? Or will I get reimbursed for only what I pay? If they reimburse me only the amount I pay will that count against me in the next year?

      • Amy at Student Loan Planner December 31, 2020 at 2:16 PM
        Reply

        You don’t have to use the full amount. I suggest you check with the office to find out the details on the offer for more information.

      • cajun December 31, 2020 at 2:46 PM
        Reply

        I hope my long reply comes through.

        • cajun December 31, 2020 at 2:51 PM
          Reply

          My long reply may have disappeared into the abyss. I cant type it out again. but basically always ask for the max, there’s no downside anymore. These days its like 40kx5yrs=200k if you have that many loans. Yes only reimbursed what you pay in. See my comments above about how to make a bolus payment near the end of service period to max out your benefit, even if doing payment plans/auto debit/PSLF.

          Nothing counts against you for the next year if you fail to budget to be able to pay 40k per year. remember…they reimburse you back tax free a month later after service period ends. so if you dont tax advantage of the max award, you are leaving free money on the table. IDK why they are only offering you 14k, what kind of healthcare worker are you? maybe they dont offer as much to others like RT, RN, PT, etc. Maybe you dont have enough loans to need a 200k award, but most physicians will get the 200k bc they have much more loans beyond that.

          • cajun December 31, 2020 at 2:52 PM

            **edit** take advantage is what I meant, not tax advantage

  3. Marcus K Lockhart November 8, 2019 at 11:36 AM
    Reply

    I am waiting to hear if they expand the program to people currently in the old program of 120,000$ over 5 years. I heard they are considering making us eligible for the extra 80,000$ but have not heard anything confirmed yet.

    • Travis at Student Loan Planner November 20, 2019 at 10:31 AM
      Reply

      That’s pretty cool let us know

    • Kyle January 14, 2020 at 1:09 PM
      Reply

      Any word if current EDRP approved applicants are eligible for the increased amount?

      • Travis at Student Loan Planner January 27, 2020 at 3:43 PM
        Reply

        I think its case by case

  4. Cajun November 20, 2019 at 11:58 AM
    Reply

    I should just note to make it clear for everyone that I am in the PAYE repayment plan with FedLoan , receiving full 40k EDRP yearly under the new mission act, and also pursuing my last 4 years of payments towards PSLF.
    It is DEFINITELY possible to combine these programs easily.

    You just have to ensure 2 things. 1, Save enough to be able to do the bolus payment near the end of your EDRP service period as I suggested in my comment above.
    2. Ensure ensure ensure that you designate to FedLoan or your service that you do NOT want pay ahead status. Keep doing the normal monthly direct debit so all payments count to PSLF.

    • Travis at Student Loan Planner December 13, 2019 at 10:43 AM
      Reply

      Great feedback thanks Cajun

  5. teri March 6, 2020 at 10:07 PM
    Reply

    Hello,
    I’m wondering if somebody has had their EDRP approved, does that mean they’ll get the amount listed, or only that they are “eligible” to get it, and you really never know if you’ll get it until you get it (like if the VA doesn’t have the funds).
    Thanks!

    • Travis Hornsby March 13, 2020 at 8:57 PM
      Reply

      They’re pretty good about giving you what they promised. And you probably get what you’re eligible for.

    • D March 13, 2020 at 9:37 PM
      Reply

      If you are approved for 40k and accept the full 40k (never ever accept less than the max amount offered), then you will get your 40k. Yes it is theoretically possible that the VISN could screw up and not release enough funds to a facility. The chance of that is SO unlikely and you would then involve National. I got my full payment after my first service period of that helps quell the worry.

      • teri March 19, 2021 at 10:44 AM
        Reply

        Thank you! I got my first payment…now wondering if that means I’ll automatically get each subsequent year’s payment or is their financial situation (and ability to pay me) reassessed every year?
        thanks again.

        • Cajun March 19, 2021 at 2:28 PM
          Reply

          So. The easy answer is yes. If you follow the rules precisely, you will get up to your max amount refunded per your contract.
          The technical answer is the funds come from national and get dispersed to the VISN and then the facility. So if something gets royally screwed at the VISN there’s a 0.01% chance you may not get a refund. They remedy that by ensuring they don’t accept too many EDRP candidates for the pot of money. For example only some specialties and locations qualify.

          I’d relax and just make sure I was maxing out my annual award through monthly payments then a bolus near the end of the service period.

  6. Brian Barber May 5, 2020 at 5:58 PM
    Reply

    I cant find under EDRP what a “qualifying loan” means. I have private Med school loans through Medachiever not federal but they were all for Medical school. Are they still considered “qualifying loans”

    • Amy at Student Loan Planner May 5, 2020 at 8:21 PM
      Reply

      It has to be a government or commercial loan for educational purposes for actual costs paid for tuition, and other reasonable educational expenses (like living expenses, books, supplies, etc). If you want the nitty gritty, you can find it on page 4 of this handbook: https://www.va.gov/vhapublications/ViewPublication.asp?pub_ID=2700

    • Cajun May 28, 2020 at 2:11 PM
      Reply

      If you can prove they were for your terminal degree that you needed in order to obtain the VA job (e.g. medical school for physicians being hired as a physician) then there is no reason they would not qualify. But yes read the handbook too

  7. Nadoma May 28, 2020 at 12:52 AM
    Reply

    How does one know if EDRP will be offered prior to accepting a VA job? My profession does fall under the acceptable professions list, but can one VA med center offer edrp and another VA in the country not offer the option? Do I just request it when I am offered a position? I don’t want to apply to a VA position without being assured this is offered. Thanks in advance for your response.

    • Travis Hornsby May 28, 2020 at 1:36 PM
      Reply

      Usually we see job offers come w EDRP attached. At least I think that’s what I’ve seen from our clients who have been offered it so I’d ask for the offer upfront

    • Cajun May 28, 2020 at 2:10 PM
      Reply

      EDRP must be listed in the USAJobs job posting then the TJO and the FJO (temporary and formal job offers). The USAJobs posting will say it qualifies for EDRP or loan repayment etc and that is a good sign and that is also your earliest sign that it could qualify. If you are being hired through another route (direct hire etc which I am not familiar with) then you will want your future boss to put EDRP in writing after confirming this with HR local EDRP person that you would qualify. The department’s Administrative Officer should be able to help also with this.

      Then you must apply quickly upon starting (only have a few months) and hound the HR person if they are unhelpful with your paperwork. 200k over 5 years is the new award max. No reason you shouldn’t get the max.

      Yes, a job or speciality may qualify in one area of the country and not the other. For example Psychiatry in Omaha may qualify but not in Los Angeles. I don’t know, just an example.

      First step is ensure it’s in the job posting. Do not agree to a TJO (temporary job offer) without it being in writing. Do not agree to the next step (FJO) without it being in that letter.

      Also negotiate for a retention or relocation bonus if you want, but some places don’t let you have both.

      Warning, the VA job hiring process is long and tedious. It will strain you and test your patience.
      But I have no regrets, it’s an amazing job. It is very department/supervisor dependent so you will want to try to talk to physicians in that Dept first.

      • Jan Gay June 29, 2021 at 3:37 PM
        Reply

        Great information. I have it listed in the job posting and HR confirmed but it was not in my TO. I am going through the hiring process so should I request it in writing before I sign a FO?

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