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Military College Loan Repayment Program (CLRP)

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The College Loan Repayment Program is taxable income, and 28 percent of the payment is withheld and sent to the IRS. (Example: Authorized payment of $100.00 - 28% tax withholdings = $72.00 paid to lender $28.00 paid to the individuals IRS account.) The military then issues a W-2 statement to the member to be used when filing his/her taxes at the end of the year.

CLRP and the GI Bill

Federal law prohibits the VA from paying benefits under the College Loan Repayment Program and the Montgomery GI Bill for the same enlistment period for active duty personnel. The law also makes the active duty GI Bill a "one-time-shot." In that, I mean that (usually) those who decline to participate in the Montgomery GI Bill when they are given the option (in basic training), cannot later change their mind and elect to participate. However, a couple of years ago, Congress passed a provision that allows active duty members to participate in the Montgomery GI Bill during their SECOND enlistment period, if they used the CLRP during their first enlistment. In most cases, one must still elect the G.I. Bill while in basic training, and make the monthly payments ($100.00 per month for 12 months). One would not be able to use the GI Bill, however, until after 30 months into their SECOND enlistment. Individuals who were told in basic training that they had to dis-enroll from the GI Bill in order to participate in the CLRP should see their education office for special application/processing instructions.

The above provisions do not apply for members of the Reserves and National Guard. Members of the Reserves and National Guard can use the Reserve Montgomery GI Bill, and the CLRP during the same enlistment period.


As it stands right now, the College Loan Repayment Program only pays on the unpaid principle balance. That means it doesn't pay for any interest accrued. However, as part of the Fiscal Year 2003 Military Authorization Act, Congress included a provision to allow the services to pay interest, beginning on October 1, 2003. At this time, none of the services have yet announced whether or not they will incorporate this new authorization into their respective College Loan Repayment Programs.

Member Responsibilities

  • Member must remain on enlisted active duty while enrolled in the program
  • Member's loans must be in good standing (Note: Loans in default status, delinquent in payments, interest, or associated charges will not receive payment.
  • Member is responsible for paying all loan fees and accrued interest
  • CLRP payment will only apply towards the unpaid principle balance
  • CLRP payments will be made directly to the lender.
  • CLRP payments are taxable income and are subject to Federal and State taxes
  • CLRP payments will be reflected on a separate W-2 and will be reported to the Internal Revenue Service (IRS).

College Loan Deferments

Some lending institutions will defer college loan payments while a member is on active duty in the military. Contact your lender to see if they offer this option.

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