Douglas Olsen
The Peace Corps does not pay for your student loans during your service, and they cannot defer your loans for you. However, there are many benefits and tools for managing your student loans during your Peace Corps service, and many volunteers are able to serve with student loans. Volunteers are still responsible for any student loans they have while serving, but there may be benefits available, including deferment, partial cancellation, income-driven repayment, or forgiveness.
| Characteristics | Values |
|---|---|
| Responsibility for student loans | Volunteers are responsible for their student loans during Peace Corps service. |
| Benefits | Benefits may be available, including deferment, partial cancellation, income-driven repayment, or forgiveness. |
| Eligibility | Eligibility depends on the loan type (federal or private) and the specific loan (Perkins, Stafford, Federal Direct, Federal Direct Consolidated, etc.). |
| Actions | Contact the lender to discuss options and research carefully as individual circumstances vary. |
| Peace Corps role | The Peace Corps provides certification letters for loan applications and can assist with lender communication through a designated financial point of contact or Power of Attorney. |
| Payment options | Volunteers can request allotments of up to 75% of their monthly readjustment allowance for bill payments, including student loans. |
| Graduate school support | The Peace Corps does not pay for undergraduate education but may offer scholarships for grad students through the Paul D. Coverdell Fellows Program. |
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What You'll Learn
Student loan deferment options
Volunteers in the Peace Corps are still responsible for any student loans they have while serving. However, there are several student loan deferment options available, depending on the type of loan and individual circumstances.
Federal Loans
If you have federal student loans, such as Stafford, Perkins, Direct, and Consolidated loans, you may be eligible for deferment during your Peace Corps service. Federal Direct, Federal Consolidation, and Stafford loans qualify for a deferment of up to three years during service, while Federal Perkins loans qualify for deferment during service and for six months after it ends. The Department of Education pays the interest during the deferment period for subsidized Stafford Loans and subsidized Federal Consolidation Loans. For Perkins Loans and subsidized Federal Direct Loans, the Department of Education does not charge interest during the deferment period.
Private Loans
For private loans, it is necessary to communicate with the lender to see if any loan relief options are available. If they do offer loan relief, it is advisable to get the options in writing.
Application Process
It is important to contact your lender as soon as you accept your Peace Corps invitation to discuss your options and determine the next steps. To renew your loans for deferment, you will need to submit a new application shortly before the previous deferment expires, along with a certification letter from the Peace Corps. This letter can be requested from the Peace Corps staff in the country of service or by emailing [email protected].
Additionally, consider assigning a trusted individual in the US as your local point of contact for lenders and the Peace Corps. Many lenders will only communicate with the borrower, so setting up a Power of Attorney (POA) with a family member or friend can be beneficial. Ensure that this person has the necessary documentation, including copies of loan documents and the POA.
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Income-driven repayment plans
While serving in the Peace Corps, volunteers are responsible for any student loans they have. However, there may be benefits available, including income-driven repayment plans. These plans are designed to help borrowers manage their student loan debt by setting their monthly payments based on their income.
The U.S. Department of Education's Office of Federal Student Aid (FSA) offers several income-driven repayment plans, such as the Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR) Plans. These plans are intended to make repayment more manageable for borrowers by setting their monthly payments at a percentage of their discretionary income.
Borrowers can apply for these plans through the updated IDR application on the StudentAid.gov website. It is important to note that the availability of these plans may vary depending on changes in government administrations and court rulings. For example, there was a temporary pause on the online application due to an injunction by the 8th Circuit Court of Appeals, but the application process has since been reopened with revisions.
To determine eligibility and understand the specific benefits of income-driven repayment plans, it is recommended to contact the lender and carefully research the options available for your specific loan type and circumstances. Additionally, for those serving in the Peace Corps, discussing these options with the appropriate staff or emailing [email protected] can provide further clarification on how to manage student loan payments during service.
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Loan forgiveness programs
Volunteers in the Peace Corps are still responsible for any student loans they have during their service. However, there are several loan forgiveness programs and benefits that may be available, depending on the type of loan and individual circumstances. Here are some key programs and considerations:
- Deferment: Volunteers can contact their lender to discuss the possibility of deferring their student loan payments during their Peace Corps service. This option may be available for both federal and private loans, but it is important to initiate the process promptly and follow the lender's requirements.
- Partial Cancellation: Federal student loans, such as Stafford, Perkins, Direct, and Consolidated loans, may be eligible for partial cancellation during Peace Corps service. Volunteers with Perkins loans, in particular, may receive a cancellation benefit ranging from 15% to 70%.
- Income-Driven Repayment: This option allows volunteers to make payments based on their income. Since Peace Corps Volunteers receive a modest monthly living allowance, income-driven repayment plans may result in very low or even $0 monthly payments. This option can also be combined with the Public Service Loan Forgiveness (PSLF) program.
- Public Service Loan Forgiveness (PSLF): Peace Corps Volunteer service is considered qualifying employment for the Department of Education's PSLF Program. This program offers tax-free forgiveness of certain federal loans after 120 monthly payments under a qualifying repayment plan. Service in the Peace Corps can count towards the required 10 years of public service employment.
- State Loan Forgiveness: In addition to federal programs, some states may offer loan forgiveness programs for Peace Corps Volunteers upon their return. It is worth checking with state lenders or relevant authorities to explore these options.
- Allotments: Volunteers can request allotments of up to 75% of their monthly readjustment allowance to make payments directly to the company holding their debt. This option becomes available after completing training and swearing-in as a Volunteer.
It is important to carefully research and understand the specific requirements and eligibility criteria for each program, as they may vary depending on the loan type and individual circumstances. Additionally, while the Peace Corps can provide certification letters and support, it is the volunteer's responsibility to manage their loan payments and explore available options with their lenders.
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Scholarships for graduate students
While serving in the Peace Corps, volunteers are still responsible for any student loans they have. However, there are certain benefits that may be available, such as deferment, partial cancellation, income-driven repayment, or forgiveness. These benefits depend on the type of loan (federal or private) and the specific loan (Perkins, Stafford, Federal Direct, Federal Direct Consolidated, etc.).
If you're interested in pursuing graduate studies after your Peace Corps service, there are several scholarship opportunities available. One option is the Peace Corps Paul D. Coverdell Fellows Program, which offers financial assistance to Returned Peace Corps Volunteers (RPCVs). This program is handled by partner universities, and the financial aid may include tuition reduction, full scholarships, stipends, or assistantships. NYU, for example, offers a 50% tuition scholarship for Coverdell Fellows who are full-time master's students. Additionally, Coverdell Fellows at NYU receive individualized career coaching and participate in a cohort-based career development program.
Middlebury Institute also offers scholarships for Peace Corps volunteers, guaranteeing Paul D. Coverdell Fellows 50% scholarships and other RPCVs 25% scholarships for their in-person master's degree programs. They also offer application fee waivers and lower tuition costs for their online degree programs, which can be started while participating in the Peace Corps.
It's important to note that the availability and amount of financial assistance may vary depending on the university and other factors such as available funds and enrollment capacities. Be sure to contact the program coordinators at the universities you're interested in to learn more about their specific scholarship opportunities and application processes.
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Private loan relief options
Volunteers with Perkins loans may be eligible for a 15–70% cancellation benefit. To determine what type of loans one has, and if they are eligible, one can contact FedLoan Servicing at 855.265.4038 or visit studentloans.gov.
Volunteers can use up to 75% of their readjustment allowance per month to cover interest due on student loans. This amount is currently $262.50 per month. Two months before departure, volunteers can download and print Peace Corps service certification letters, which can be used to certify student loan deferment documentation while serving.
Peace Corps service is considered qualifying employment for the Department of Education's Public Service Loan Forgiveness (PSLF) Program. Under PSLF, the remaining amount of certain qualifying federal loans could be forgiven after 120 monthly, timely, full, scheduled payments are made under a qualifying repayment plan while working full-time for a qualifying employer.
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Frequently asked questions
No, the Peace Corps does not pay for your loans during service and cannot defer your loans for you. However, there are many benefits and tools for managing your student loans during your Peace Corps service.
Some loans can qualify for an income-based repayment plan. As Volunteers do not make a significant income, the monthly payment during service could be $0. Some federal loans qualify for deferment, meaning you wouldn’t need to make payments on your student loans during your Peace Corps service.
You want to be 100% sure of your student loan type because it will determine what options are available to you. Contact your lender as soon as you accept your Peace Corps invitation to see what options are available to you. Federal Direct, Federal Consolidation, and Stafford loans qualify for a deferment for up to three years during service. Federal Perkins loans qualify for deferment during service and for six months after your service ends.
Contact your lender to see if they provide loan relief during Peace Corps service. If they do, get the options in writing.
Consider the communication challenges during your Peace Corps service. Spotty internet connections, time zone differences, and international call rates can all make having a POA extremely convenient during your service.
