At a Glance

According to the 2020 Military Financial Readiness Survey, 35% of service members said they do not pay their bills on time, 54% said they are “just getting by financially,” and 86% said they worry about their finances.

Only 33% of veterans with personal debt are very confident they can pay off their loans.

If you’re trying to pay off debt, it can feel overwhelming. However, if you’re a veteran, there are options available to you that may not be available to civilians and can help you pay off your debts faster.

In this article, learn more about:

Can the VA help me with debt?

There are a number of programs offered by the government to help veterans manage and repay loans and other debt, some of which may even forgive debt. Examples of debt relief available for veterans include:

1. Military debt consolidation for VA homeowners. If you have a VA home loan, you may be eligible for a Military Debt Consolidation Loan (MDCL). This allows you to borrow against the equity in your home and use those funds to pay off other debts. Partially guaranteed by the VA, you’ll have access to better loans, interest rates, and terms.

2. Credit counseling. This process helps primarily with credit card debt. A certified credit counselor will help evaluate your debt and determine the best options for debt relief based on your personal situation.

3. Debt consolidation. Consolidating your debts means combining multiple debts into one more manageable debt, ideally with lower interest. There are different options available for consolidation, such as consolidation loan or balance transfer.

Having a VA loan qualifies you for a MDCL which can also be used to pay off other unsecured debts like credit cards, medical bills, and other personal loans. Typically, you’ll pay a lower interest rate than civilians, saving you money in the long run.

Additionally, VA military debt consolidation loans usually have easier qualifying standards, lower credit score and debt-to-income requirements, longer repayment terms, and other benefits.

Sorry, we didn’t find any options that meet your requirements. Try changing your loan amount.

4. Loan modification. VA loan modification is when a lender changes the terms of your loan in order to avoid foreclosure. The delinquent payments are rolled into a new balance, and a new payment schedule is enacted.

5. Short sale. If you’re able to convince a lender to sell your home for less than what’s required to pay off the loan, the lender typically receives some money from the VA to offset the loss.

Other options like debt settlement, which is when you work with a settlement company and negotiate with your creditors to pay a lower percentage of your debt, or filing bankruptcy, are additional debt relief options but should be considered as a last resort. They often take years, and incur penalties. Plus interest and fees can add up, and they can do massive damage to your credit score and report.

Veterans may have an easier time settling debts with veteran-specific credit cards including:

  • Chase military credit cards
  • Visa Veteran Tickets credit cards
  • Navy Federal Credit Union credit cards
  • Air Force Federal Credit Union credit cards
  • Credit cards granted by Army credit unions

If you have VA benefit debt (related to VA disability compensation, non-service-connected pension, or education benefits), you may have additional options including:

  • Repayment plans. The VA may offer a repayment plan for certain types of debt, which allows you to repay the debt in smaller monthly amounts over time. You can request a repayment plan of up to five years.
  • Compromise offer. If you can’t repay the full debt over time, you may request a compromise offer. This means you’ll offer a smaller, one-time lump sum amount as full debt payment.
  • Waiver. If you can’t repay any of the debt, you can request a debt waiver from the VA. This means you’re requesting the VA forgive all or part of your debt, and you won’t have to repay the amount waived.
  • Temporary hardship suspension. If you experience a natural disaster or other situation and need financial relief, you may ask the VA to temporarily pause debt collection.

If you need more time to pay off your debt, you can contact the VA Debt Management Center to set up a repayment plan or adjust your current repayment plan. They may even help you lower the amount of your monthly payments.

Other organizations you can contact for debt relief assistance include:

  • The American Legion
  • Army Emergency Relief
  • Navy/Marine Corp Relief Society
  • MilitaryOneSource
  • USA Cares
  • Air Force Aid Society
  • Disabled American Veterans

Debt relief for disabled veterans

If you’re totally and permanently disabled, you may qualify for Total and Permanent Disability Discharge of your federal student loans. This program relieves you from having to repay:

  • A William D. Ford Federal Direct Loan Program loan
  • A Federal Family Education Loan (FFEL) Program loan
  • A Federal Perkins Loan

It also relieves you from having to complete a TEACH Grant service obligation.

To qualify, you must provide documentation from either the VA, Social Security Administration, or a physician. Depending on who submits the documentation, there are different requirements to support your eligibility. To apply, you must complete a TPD discharge application and send it, along with required documentation, to Nelnet (the TPD discharge servicer).

Student loan debt relief for veterans

Veterans are protected under the Servicemembers Civil Relief Act, which caps interest on student loans at 6% for as long as you serve in the military. Veterans with student loans may also be eligible for special programs that can forgive interest on their loans, or even cancel them.

For example, the Department of Education is writing off the interest on student loans of thousands of veterans who received imminent danger or hostile fire pay during their military service, and they do not have to pay interest on certain federal student loans received on or after October 1, 2008.

The TPD program is also available for student loan forgiveness for those who qualify.

Other options for paying for higher education include:

  • The Reserve Educational Assistance Program (REAP), for members of the reserves who were called up to active duty for at least 90 days after 9/11/2001.
  • The Veterans Educational Assistance Program for veterans who bought into the program, enabling them to receive up to 36 months of benefits.
  • The Veterans Retraining Assistance Program (VRAP), for older, unemployed veterans who are not eligible for other education benefit programs.
  • Health Professions Student Loan Repayment for healthcare professionals

What is the GI bill?

The GI bill, originally passed in 1944, allows veterans to receive higher education or vocational training for free, or nearly free. Veterans must choose which program to use in order to optimize their benefits, and options include:

  • The Yellow Ribbon Program, intended to help with the cost of private school tuition and offered at more than 1,800 colleges in the U.S.
  • Post-9/11 GI Bill, which applies to individuals with active duty service on or after September 11, 2001

Debt relief grants for veterans

Veteran debt relief grants are available to veterans who have outstanding debt and meet certain requirements. These grants can provide financial support without the need to repay the money. This financial aid gives immediate cash that can be used for basic life needs, including repaying debt.

Other nonprofit organizations offer grants to veterans to help with financial difficulties they may face. These programs provide financial aid grants to those who apply and qualify, some of which pay the creditor directly, removing the burden from you.

How do I contact the VA Debt Management Center?

If you need help with your debt, the VA Debt Management Center may be able to help:

  • Call 800-827-0648 (or 1-612-713-6415 from overseas), Monday through Friday, 7:30 a.m. to 7:00 p.m. ET.
  • Use the Ask VA function online
  • Contact by mail at:
U.S. Department of Veterans Affairs
Debt management Center
P.O. Box 11930
St. Paul, MH 55111