Ibrahim Gardner
AmeriCorps VISTA is a program that aims to alleviate poverty and strengthen communities across the United States. Members work full-time for one year to build the capacity of community organizations. While serving in AmeriCorps VISTA, individuals are still responsible for repaying their student loans. However, there are several benefits and options available to help with student loan repayment, including loan deferment, forbearance, income-driven repayment plans, and loan forgiveness programs. Upon completion of the program, members can choose between an education award of approximately $6,000 to $7,395 to pay for future education or repay existing eligible federal student loans, or a cash stipend of approximately $1,800.
| Characteristics | Values |
|---|---|
| AmeriCorps VISTA members who complete their service | Earn a Segal Education Award |
| Segal Education Award amount | $6,000 or $7,395 for full-year members starting on or after October 1, 2023 |
| End-of-service cash stipend | $1,800 for a full year of service |
| End-of-service cash stipend for AmeriCorps leaders | $3,000 for a full year of service |
| Federal student loans + stipend | Deferment |
| Federal student loans + education award | Forbearance |
| AmeriCorps VISTA members | Eligible for Public Service Loan Forgiveness (PSLF) program |
| AmeriCorps VISTA and Peace Corps volunteers | 15% forgiveness of Perkins Loans for each of the first two years of service |
| AmeriCorps VISTA and Peace Corps volunteers | 20% cancellation of Perkins Loans for the third and fourth year of service |
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What You'll Learn
Student loan forbearance
AmeriCorps VISTA members who complete a year of service can choose to receive either an education award of approximately $6,000 to $7,395 or an end-of-service cash stipend of around $1,800. The education award can be used to pay off existing eligible federal student loans. This award is in the form of a voucher, not cash, and you have seven years to use it after completing the service.
If you choose the education award, you can request forbearance, which is a temporary postponement of principal loan payments. Interest on your loan still accrues, but after you complete your service, you can ask the AmeriCorps office of the National Service Trust (the Trust) to pay off the interest accrued during your year of service. However, these payments are considered income, so you will have to pay taxes on the amount of interest paid by the Trust.
If you opt for the cash stipend, you can request deferment, which is a postponement of monthly loan payments. Deferment may be available for private loans, regardless of which end-of-service benefit is selected. For subsidized loans, the U.S. Department of Education will automatically pay the accrued interest if the loan is deferred.
It is important to note that refinancing federal student loans will take them out of forgiveness options. Public Service Loan Forgiveness (PSLF) is the best option for most AmeriCorps members. PSLF wipes out your entire federal loan balance after 10 years of qualifying payments, which includes your AmeriCorps service. If PSLF is not an option, Income-Driven Repayment (IDR) caps your monthly payment based on income and forgives your remaining balance after 20-25 years.
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Loan forgiveness
AmeriCorps is a government program that offers a range of benefits to its members, including student loan forgiveness. The Public Service Loan Forgiveness (PSLF) program is the most common way for AmeriCorps members to have their student loans forgiven. PSLF wipes out the remaining balance on federal Direct Loans after 120 qualifying monthly payments while working full-time for an eligible employer, including government and nonprofit organizations. AmeriCorps is considered a qualifying employer for PSLF, and members can use their time with AmeriCorps State, National programs, VISTA, and NCCC to count towards the 120 payments.
In addition to PSLF, AmeriCorps members may also be eligible for other loan forgiveness options, such as IDR Forgiveness (Income-Driven Repayment) and Perkins Loan Cancellation. IDR caps monthly payments based on income and forgives the remaining balance after 20-25 years. Perkins Loan Cancellation can cancel up to 70% of the loan balance over four years for those who served in AmeriCorps VISTA and still have Perkins Loans.
AmeriCorps VISTA members specifically earn a Segal Education Award of approximately $6,000, which can be used to pay off student loans or for future educational expenses. This award can be chosen instead of an end-of-service cash stipend of about $1,800. Additionally, VISTA members can request the National Service Trust to pay off the interest accrued during their year of service, although this will be considered taxable income.
It is important to note that some options, such as refinancing, may lower interest rates but do not lead to loan forgiveness. Additionally, deferment or forbearance periods may not count toward forgiveness requirements, and interest will continue to accrue during these times.
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Student loan deferment
AmeriCorps VISTA members can earn a Segal Education Award of approximately $6,000, which can be used to pay off student loans. Members can also choose to receive an end-of-service cash stipend of around $1,800 instead of the education award.
If you choose the education award, you may qualify for forbearance, which is a temporary postponement of principal loan payments. Interest on your loan will still accrue, but you can request that the AmeriCorps office of the National Service Trust pays off the interest that accrued during your year of service after you complete it.
If you choose the cash stipend, you may qualify for deferment, which is a postponement of monthly loan payments. You can also apply for deferment if you have private loans, regardless of which end-of-service benefit you select. For subsidized loans, accrued interest will be paid by the U.S. Department of Education if the loan is deferred.
To qualify for forbearance or deferment, you must have federal loans. Your lender decides whether you can defer your student loans during your year of service, so be sure to contact them to request deferment. When applying, indicate 'economic hardship' as the reason.
Additionally, AmeriCorps members who served in AmeriCorps VISTA and still have Perkins Loans may be able to cancel up to 70% of their balance over four years. There are also other student loan forgiveness options for AmeriCorps members, such as PSLF and IDR Forgiveness.
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AmeriCorps education award
AmeriCorps VISTA members who complete a year of service can choose to receive either an education award or an end-of-service cash stipend. The education award, also known as the Segal AmeriCorps Education Award, can be put toward future higher education expenses or to pay off qualified student loans. The award is equivalent to the maximum Pell Grant of the fiscal year in which the term of national service is approved, and the amount of the Pell Grant can vary annually. For members starting their service on or after October 1, 2023, the value of the education award is $7,395 for full-year members.
The education award can be used to pay current educational expenses at eligible institutions of higher education and training programs, both domestic and foreign. This includes most post-secondary colleges, universities, and technical schools that participate in the Department of Education's Title IV student aid programs. The award can also be used to repay existing eligible federal student loans, such as loans backed by the federal government under Title IV of the Higher Education Act (excluding PLUS Loans to parents of students) and loans made by a state agency, including state institutions of higher education.
It is important to note that the education award is subject to federal and possible state tax in the year each payment is made. Additionally, the award cannot be transferred to another individual; it can only be used by the person who earned it.
AmeriCorps members who choose the education award may also qualify for loan deferment or interest forbearance on their student loans during their service. Forbearance is a temporary postponement of principal loan payments, while deferment allows for a postponement of monthly loan payments. Accrued interest on subsidized loans will be automatically paid by the U.S. Department of Education if the loan is deferred.
While the education award provides financial assistance for educational expenses, some have expressed concerns about the wording used by AmeriCorps, characterizing it as an "award" that is "earned." There are also mixed opinions about the tax implications of the award, with some individuals choosing not to claim it on their taxes.
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Income-driven repayment plans
AmeriCorps VISTA members who complete a year of service can choose to receive either an education award of approximately $6,000–$7,395 or an end-of-service cash stipend of around $1,800. This education award can be used to pay off existing eligible federal student loans. The cash stipend, on the other hand, can be used for anything, including paying off student loans.
If you opt for the education award, you can apply for forbearance, which is a temporary postponement of principal loan payments. Interest on your loan will still accrue, but after you complete your service, you can request that the National Service Trust pays off the interest accrued during your year of service.
If you choose the cash stipend, you can apply for deferment, which is a postponement of monthly loan payments. For subsidized loans, accrued interest will be paid by the U.S. Department of Education.
Additionally, AmeriCorps service is recognized by the Income-Based Repayment (IBR) plan, which was created by the College Cost Reduction and Access Act of 2007. The IBR plan helps make repaying education loans more affordable for low-income borrowers, such as AmeriCorps members living on a stipend.
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Frequently asked questions
Whether you have private or federal student loans, you are still responsible for repaying student debt while serving in AmeriCorps VISTA. However, there are several options available to help with student loan payments during and after your service.
You may qualify for loan deferment or forbearance during your service. Deferment is a postponement of monthly loan payments, while forbearance is a temporary postponement of principal loan payments. You can also explore income-driven repayment (IDR) plans that will significantly reduce your monthly payment.
Upon completion of your service, you can choose to receive a Segal Education Award of approximately $6,000-$7,400 or an end-of-service cash stipend of approximately $1,800. You can use the education award to pay off student loans.
To qualify for loan deferment or forbearance during your service, contact your lender to request a deferment or indicate ''economic hardship' as the reason. After your service, you can use the Segal Education Award to pay off your student loans.
