How to Apply and Manage Peace Corps Student Loans in 2021.
Peace Corps Student Loans: The aim of this article is to inform you of the impact of Peace Corps service on your student loans. So let’s begin!
With the increasing number of college graduates carrying student loan burdens, it is important to selflessly consider how Peace Corps service can have an impact on your finances.
Fortunately, there are many benefits and tools for managing your student loans during your Peace Corps service and a lot of volunteers are able to serve with student loans.
What are the Benefits of Peace Corps Service on a Student Loan?
Volunteers are responsible for any student loans they have while serving. However, there may be benefits available to you, which include deferment, partial cancellation, income-driven repayment, or forgiveness.
Potential benefits depend on the type of loan you have; federal or private, the specific loan you have; Perkins, Stafford, Federal Direct, Federal Direct Consolidated, amongst others and what you intend to do after service.
If you have federal student loans, such as Stafford, Perkins, direct, and consolidated loans, you may be eligible for deferment, partial cancellation, income-driven repayment, or eligibility for the Public Loan Service Forgiveness Program during Peace Corps service. Volunteers with Perkins loans may be eligible for a 15–70 percent cancellation benefit.
If you have a private loan, you will need to contact your servicer to see if they provide any student loan relief for service.
How to Manage Your Student Loans in Peace Corps?
There are five ways you can manage your student loans in the Peace Corps service. They include:
1. Peace Corps Student Loans Deferment
If you have federal student loans, you’re in luck. By serving in the Peace Corps, you may be eligible for a loan deferment during your term of service.
You can also apply for an income-driven plan, where your payments could be zero dollars while you are serving with the Peace Corps. Given your “volunteer” status and a small stipend, you’d likely qualify to pay nothing during the duration of your service.
2. Partial Loan Cancellation
You could be eligible for partial loan cancellation if you have Perkins Loans and serve in the Peace Corps. The amount varies depending on terms of service, but you could have between 15 to 70 percent of your student loan balance canceled. You must have an official Peace Corps representative sign your cancellation form to confirm your service.
However, if you put your Perkins Loans into a Direct Consolidation Loan, you’ll no longer be eligible for any loan cancellation through the Peace Corps.
Nevertheless, it’s important to remember that you must re-certify each year on an income-driven plan. If you’re abroad serving a two-year commitment, it’s important to stay on top of recertification deadlines. Be sure to communicate with your student loan servicer regularly.
3. Public Service Loan Forgiveness Program
Serving with the Peace Corps also makes you eligible for student loan forgiveness through the Public Service Loan Forgiveness (PSLF) program. Under the PSLF program, student loan borrowers may be able to get their Direct Loans forgiven after ten years of public service.
Most Peace Corps terms are 27 months, so you could have over two years of service count toward your ten-year public service term. Of course, that also means pursuing a career in the public sector or in the nonprofit world after your term of service.
4. Private Student Loans Deferment or Forbearance
If you have private student loans, unluckily, you are not eligible for as many benefits as you would be with federal loans.
You may be able to request a deferment or forbearance on your private student loans during your Peace Corps term of service. But, your loans will still gain interest. Each private student loan servicer is different, so ask about what options are available.
Finally, it’s best to put some money toward your private student loans while serving in the Peace Corps. If you’re thinking about joining the Peace Corps in a few years, focus on paying down your private student loans as much as possible before you serve.
5. Life After Peace Corps
Current Peace Corps volunteers are awarded $9,450 (pre-tax) after serving their initial term of 27 months. This can help volunteers transition back to the States and become accustomed to U.S. life.
That sum could be used as a deposit for an apartment or a savings boost. However, if you have rent and savings covered, it can also be a huge sum payment towards your student loans.
After serving in the Peace Corps, student loans will still be around. You’ll want to continue to stay in touch with your loan servicer. Be sure to update your information and stay on top of any payments required.
Whether you choose to go back to school, enter into the public sector, or opt for private sector employment, joining the Peace Corps can help you get to that next stage in your life. But if you have student loan debt, review all your financial options before pursuing a life of service.
StudentsandScholarship Team.
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