5 Key SCRA Benefits that Apply to Student Loans

Juggling military service and student loan payments is no small feat, especially when your focus should be on duty, not debt. If you’re an active-duty servicemember wondering whether your student loans come with any breathing room, you’re not alone. Many military borrowers don’t realize they may qualify for protections that can ease financial pressure while they serve.

Thanks to the Servicemembers Civil Relief Act (SCRA), certain legal safeguards are in place specifically to support you during active duty. These protections aren’t just technicalities buried in paperwork. They can directly impact how much you pay, when you pay and what happens if you can’t.

So, what exactly do these SCRA benefits for student loans mean? Keep reading, because the most impactful perks often go unnoticed, and you’ll want to know exactly how they work in your favor.

What is the Servicemembers Civil Relief Act (SCRA)?

The SCRA is a federal law that provides a range of legal and financial protections to active-duty military members, including members of the Army, Navy, Air Force, Marine Corps and Coast Guard, as well as reservists and members of the National Guard when they are called to active duty. 

Ultimately, the SCRA’s purpose is to relieve financial and legal burdens (including college costs after the fact) on servicemembers so they can focus on their military duties without facing unfair penalties or civil issues back home.

What Protections Does the SCRA Offer?

The SCRA offers several protections, including an interest rate cap, eviction protection, foreclosure and repossession protection and lease termination. It also allows for a stay of civil proceedings and protection from default judgments. Here’s a quick overview of each:

• Interest rate cap: The SCRA caps interest rates at 6% on loans and credit (including mortgages, credit cards and car loans) taken out before active duty.
• Eviction protection: Eviction protection prevents landlords from evicting servicemembers and their dependents from rented housing without a court order as long as rent is below a certain amount.
• Foreclosure and repossession protection: Foreclosure and repossession protection prohibits lenders from foreclosing on a home or repossessing property without a court order during and shortly after active duty.
• Lease termination: Lease termination allows servicemembers to terminate residential, auto and business leases without penalty if they receive orders for deployment or a permanent change of station.
• Stay of civil proceedings: This postpones or suspends civil lawsuits, foreclosures and administrative proceedings if military service affects the ability to participate.
• Protection from default judgments: This advantage prevents courts from issuing default judgments without confirming whether the defendant is on active duty.

How does it help with student loans? Here’s an example: Jessica is a U.S. Army sergeant who recently got deployed overseas. Before she entered active duty, she had a student loan and a car loan — both with interest rates above 6%. Under the SCRA, she’s entitled to have the interest rate on any pre-service loans capped at 6% per year, including her student loans, as long as she incurred those debts before entering active duty.

Jessica contacts her lenders and provides a written request and a copy of her active duty orders. The lenders must reduce the interest rates on those loans to 6%, forgive any interest above that amount (not just defer it), and apply the change retroactively to the start of her active duty. This reduces her monthly payments while she’s serving and protects her from financial strain during deployment.

Learn more: Why is College So Expensive in the United States?

5 Important SCRA Benefits for Managing Student Loans

What do you need to know about SCRA benefits for managing student loans? Let’s take a look.

Interest Rate Reductions on Pre-Service Loans

The SCRA interest rate cap limits the interest rate on eligible student loans to 6%. This benefit applies only to loans taken out before entering active duty and can make a noticeable difference in how much you owe over time. 

For example, if you took out a private student loan at a 10% interest rate before your service began, this cap could significantly reduce your monthly payments and the total interest you’ll ever pay.

For example, a $35,000 loan at 9% interest would rack up $3,150 in yearly interest. With the 6% SCRA cap, that drops to $2,100, saving $1,050 per year. Over a three-year service period, that’s more than $3,000 in saved interest.

Activating this benefit isn’t automatic. You’ll need to send a written request along with your active-duty orders to your loan servicer. It’s a small step that can lead to big savings.

Protection from Default Judgments

Missed a few payments and now getting legal notices? That alone can be stressful, but being on active duty adds another layer. The SCRA steps in here with protections that keep courts from moving forward without confirming your military status. If you’re serving, the court can’t simply issue a default judgment on your student loan without checking first.

Anyone trying to sue you over missed payments must file an affidavit declaring your duty status, with supporting details. If they can’t confirm it, they have to say so upfront. This applies not just to lenders but also to third-party collectors and law firms trying to recover debt on behalf of loan servicers.

If you’re confirmed to be on active duty, the court must pause proceedings for at least 90 days or appoint legal representation. If a judgment slips through without verification, you have the right to challenge it later. These legal safeguards help ensure that military borrowers aren’t penalized while serving.

Delay or Stay of Legal Proceedings

Court dates and active duty rarely line up. You might be thousands of miles away, operating on a different schedule or handling responsibilities that simply don’t allow time for legal matters. The SCRA recognizes this conflict and gives you the ability to request a delay in court proceedings if military service limits your ability to respond.

By submitting a statement that outlines how your duties affect your availability, along with a future date when you can appear, the court is required to pause the case. This stay typically lasts at least 90 days, though it may be extended depending on the situation.

This safeguard helps prevent legal escalation while you’re fulfilling service obligations. It also encourages those pursuing claims, including attorneys and collectors, to account for military commitments before pushing a case forward. Respecting your schedule isn’t just courtesy, it’s the law.

Loan Deferment Eligibility and Administrative Forbearance

Getting a break from student loan payments while you serve can feel like a relief, but it’s important to know what kind of break you’re actually getting. Some loan servicers offer deferment or administrative forbearance to military borrowers during deployment or active duty. While the SCRA doesn’t directly require this, many lenders factor in your verified military status when deciding.

The two options may look similar, but they work differently. Deferment can pause payments without interest piling up on subsidized federal loans. Forbearance also pauses payments, but interest keeps growing on all types of loans. Over time, this can add up and increase your total balance.

This matters even more if you’re on track for student loan forgiveness. Time spent in deferment or forbearance often won’t count toward forgiveness, meaning you’ll need to make up for those months later. Before deciding, ask your loan servicer how these options work with your current plan and how SCRA status affects what’s available to you.

Learn more: How Families Can Use VA Loans to Support College-Bound Teens

Legal Oversight and Accountability for Lenders

If a loan servicer ignores your rights under the Act, they could face real consequences. That includes financial penalties, forced refunds, or even getting investigated by the Department of Justice.

As a servicemember, you have every right to dispute unfair charges, challenge unauthorized collections, and request corrections. You’re not expected to navigate these issues alone. Legal support is available through resources like your base’s Judge Advocate General (JAG) office or civilian legal aid.

It’s also smart to keep detailed records. Hold on to emails, copies of military orders, and any paperwork you submit to your loan servicer. These documents can make all the difference if you ever need to show that your SCRA protections were violated. Accountability starts with awareness, and having proof on your side helps protect your legal rights.

Know Your Benefits Under SCRA

Military service already comes with enough responsibility, and student loan stress and paying for college after the fact doesn’t need to be one of them. The SCRA offers critical support through reduced interest, legal safeguards and options to pause repayment when duty calls. These protections are not just formalities; they’re meaningful ways to keep your finances steady during service and one of the ways to get college paid for. 

Reaching out to your loan servicer early and confirming your active duty status can open the door to benefits you might otherwise miss. Legal advisors and JAG offices can help ensure those rights are upheld. With the right steps, you can serve without the added burden of student loan pressure.