The Peace Corps Loan Forgiveness Program is one of the most accessible student loan forgiveness programs available, because it’s open to anyone willing to become a Peace Corps volunteer.
And in 2016, while many of the other Federal Student Loan Forgiveness Programs are being scaled back, or even de-funded entirely, this one is likely to remain funded in perpetuity.
Serving in the Peace Corps is a benefit unto itself, but the fact that the Peace Corps offers assistance for student loans is a pretty compelling reason to consider signing up as a volunteer.
The Peace Corps and Student Loans
First, the Peace Corps has a specific program offering Loan Forgiveness (referred to as Loan Cancellation), but it’s only available to those with Perkins Loans.
Second, service in the Peace Corps counts as “qualifying employment” for the Public Service Loan Forgiveness Program, which offers comprehensive student loan forgiveness (meaning that your loans are completely cancelled and the remaining debt you still owe is wiped out!).
Third, while you’re serving in the Peace Corps, you’ll have access to the Peace Corps Student Loan Deferment Program, which allows you to avoid making monthly payments on your student loans for up to three years, or for as long as you remain a volunteer (depending on what type of student loan you’ve got).
1. The Peace Corps Loan Forgiveness Program
When people talk about receiving student loan forgiveness for Peace Corps work, they’re almost guaranteed to be referring to the program that offers loan cancellation benefits to borrowers with Perkins Loans.
Here’s how the Perkins Loans cancellation program works for Peace Corps volunteers:
- Volunteers qualify for a 15% loan cancellation benefit for completing each of their first two years of service
- Volunteers qualify for an additional 20% loan cancellation benefit for completing each of their third and fourth years of service
- Up to 70% of a Perkins Loan can be cancelled via the Peace Corps loan forgiveness program
Please note that volunteers must complete the entire 365 day period of service to qualify for any of the available cancellation benefits, and that there is no cancellation offering for partial completion (i.e., even if you complete 364 days of service, you won’t receive any pro-rated cancellation benefits).
Time you spend in training does count toward the first year of service, so be sure to include that when estimating how long it’ll take you to qualify for each of the different benchmarks.
Consolidating a Perkins loan with other student loans will cause you to lose eligibility for the cancellation benefit, so don’t consolidate Perkins loans with any other form of student loan debt.
2. The Public Service Loan Forgiveness Program
The Public Service Loan Forgiveness Program has been around for many years, but was recently enhanced by President Obama’s Student Loan Forgiveness Reforms.
Public service loan forgiveness is a comprehensive student loan forgiveness program that wipes out your student loan debt after you’ve made 120 qualifying payments on your Federally-funded student loans.
To be eligible for the program, borrowers must be employed at a full-time position in public service while they make qualifying payments, and the Peace Corps Volunteer program counts as a qualifying “public service” position.
Is There a Catch?
Unfortunately, yes, there’s a major problem with attempting to use Peace Corps volunteer service to qualify for PSLF benefits.
Since qualifying for loan forgiveness via the Public Service Loan Forgiveness Program requires making 120 scheduled, full, and on-time monthly payments, you’ll either need to have very little student loan debt (and thus low monthly payments), or enough money saved up to make your monthly payments while living on the measly Peace Corps monthly stipend.
The vast majority of Peace Corps volunteers (basically anyone other than those with a Trust Fund) won’t be making enough money while serving to actually cover the costs of monthly student loan payments, so the PSLF program won’t be of much use to them.
And unfortunately, it’s why we wouldn’t recommend that anyone but a very small and select group of people attempt to use the Peace Corps to achieve eligibility for the Public Service Loan Forgiveness Program.
3. The Peace Corps Loan Deferment Program
On the bright side, there is an excellent student loan deferment program for Peace Corps volunteers!
In fact, all of those volunteers with Federally-funded student loans are virtually guaranteed to have access to the Peace Corps Loan Deferment Program.
Depending on the type of loan you have, you’ll either be eligible for up to 3 years of student loan deferment benefits, or unlimited deferment benefits that last as long as you remain a volunteer.
What’s a Volunteer to Do?
If you want to serve in the Peace Corps, but you don’t have Perkins loans, then your best bet will be to apply for a loan deferment and use some (or all) of your eventual Readjustment Allowance to pay down your student loan debt.
Unfortunately, serving in the Peace Corps won’t get your rich, but it certainly will provide you with an appreciation for a simpler form of living, a great deal of self-reliance, and the ability to organize and get things done in an efficient manner.
For official details about the Peace Corps Student Loans Programs, please visit their official website here.
Other Debt Relief Options
For other ideas on getting access to more lucrative forms of Student Loan Debt Relief, be sure to check out some of the other pages on our site.
And while the Peace Corps might not be the best avenue to receiving student loan forgiveness, if you’re considering leaving the civilian world behind and being deployed to a foreign country, then you just might want to consider looking into the much more valuable Military Student Loan Forgiveness Programs.
The military may seem like the complete opposite of the Peace Corps, but outside of war time operations, these organizations have essentially the same mission – winning hearts and minds by helping impoverished people.
Even if you decide that the Peace Corps isn’t for you, please play your part in helping promote visibility for this excellent benefits program, as it’s one of the biggest incentives on the table for potential volunteers.
Everyone around the world benefits from the Peace Corps’s existence, and the more volunteers who sign up, the better off we’ll all be.
To help encourage more people to join, please share this page with your friends and family on Facebook, Twitter and Google+.
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