Everything You Need to Know About VA EDRP | Student Loan Program


Here’s how to use the VAEDRP program, this is the Education
Debt Reduction program. This is a program that’s been around for a little while, but it was not nearly as generous in the past as it is today. Congress very recently,
in the middle of 2018, changed the amount that you could receive for this VAEDRP program
from 120 thousand dollars cumulatively for five
years, to 200 thousand dollars for a five year period. Now, according to all the documents that I’ve been able to
find on this program, it is tax free meaning that you do not have to pay taxes on this contribution, this reimbursement that
you receive from the VA. This is designed to recruit
people in very difficult to recruit and retain positions. Now, when you’re applying
for a position with the VA, if you have access to the
EDRP loan repayment program it should say that on the
application materials. If you don’t see it, then
you need to discuss it with HR prior to agreeing
to the employment offer, because you wanna make sure that that’s on the final offer letter, otherwise you might have a harder
time getting it later. Right, so a lot of these
programs will specifically state that they’re offering this
education debt reduction program, the EDRP program, now what can you do when you’re trying to get that benefit, but you also potentially qualify for the PSLF loan forgiveness program? So this is really interesting, and this just a classic example of why its student loan policy’s so messed up, because you’ve got the department of veteran affairs, which
is in it’s own silo, and then you have the
department of education, which is it’s own silo,
and they’re not talking to one another at all, so
here’s why this is a problem. The PSLF program is a ten year program, and that starts when you’re in residency, if you manage it right
and hire a group like us to figure out exactly how to
set everything up correctly. So in other words you’re
paying a income driven repayment program for ten years, but you could easily leave training, lead residency or fellowship with anywhere from three to seven years towards that ten years of payment credit. Now when you go to work for the VA, a lot of times you go to work for the VA when you’re in attending,
so most physicians really should have three to seven years worth of credit that they’ve
set up ready for the PSLF program when they become
in attending with the VA. So that’s kind of an
interesting situation to be in, because the VA program
is a five year program. So in other words, if you make payments based on your income for only
three to seven more years basically depending on
how long your training was with the VA, you could
get the rest of your loans forgiven tax free if you end up qualifying for the PSLF, now the VA is obviously qualifying
job for public service loan forgiveness, that’s the program where if you make ten years
of cumulative payments based on your income, then you get the balance of your loans forgiven. So, thinking about this in terms of how to put the two programs together, you can get reimbursed this money at the end of the year, and the VA just wants to see proof that
you used it on your loans. So for this EDRP program,
you could reimburse yourself for payments made under something like the pay as you earn, or revised
pay as you earn programs. And that is money that would be able to not be spent just out of your pocket, so that is actually a
real positive reward. Now the money that you’re paying extra towards your loans, if you’re going also for public service loan forgiveness, really that’s kinda wasted money. Now you don’t necessarily
wanna view it that way, ’cause it kinda reduces the risk of PSLF, right, it reduces kind
of the anxiety level, ’cause you’re seeing
your loan balance fall, but you also wanna make
sure that your loan servicer does not put you into pay it
ahead status in your loans, because then you would create problems with getting that ten years
of cumulative payment credit towards PSLF, if you’re trying
to go for both programs. Really I see this VA program
being an excellent program for people that have less
than 200 thousand in debt, and it is a decent program to do even if you have more than that, you just have to be very
careful in how you manage it, because you wanna make
sure that you’re getting reimbursed with your student loan income driven repayment
amounts that you’re making on your loans, so you
can get the max benefit of this program as well as pairing it with the public service
loan forgiveness program. Hopefully the people at the VA and the people at the
Department of Education realize they’ve created
tow redundant loan programs that really are very similar,
and they would create a way to make these programs complimentary versus more of a really
complicated substitute that takes someone who’s done
a lot of student loan plans hours to understand and explain to you. Unfortunately it’s pretty complicated, so if you are looking at accepting a VA loan repayment program,
you wanna make sure that it’s not taxable, if it is taxable, and you’re going for the public service loan forgiveness program,
what you’re effectively doing is just creating extra
income that you’re gonna have to pay 10% of to the government, because the government basically takes 10% of what’s on your tax return for student loan payments, so in that case you can actually be
receiving money from the VA, but even losing money as a result of getting money that you have to use towards your principle payments, since the PSLF program has no limit in what they’ll forgive tax free. So it’s pretty complicated,
but if you’re going for the VAEDRP program, just know that you wanna make sure that you don’t get your loans put into
pay it ahead status, and you also need to
see if you could utilize the public service loan
forgiveness program to benefit. Other VA programs are not
necessarily as generous, so it sometimes can need
to be a case by case basis in terms of what you’re being offered. But make sure, if you’re
taking the job with the VA, that you ask about the EDRP program, ’cause it could get you
out of debt much sooner. And if you’re trying to
figure this stuff out and you’re really
confused, reach out to us and consider hiring us
for a student loan plan, studentloanplanner.com/help.

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