3 ways the Peace Corps helps you tackle your student loans

Even if your loan debt is a fraction of that amount, it still looms large! Should this type of financial burden make you reconsider your dream of serving in the Peace Corps? Can you really afford to volunteer abroad instead of working in a “normal” job after graduating?

While there are many factors to weigh as you consider living and working for 27 months overseas, if student loan debt is an issue, we have some tips for how serving with the Peace Corps can actually help you manage, reduce, or defer student loan debt while serving.

1. Payments during service

Regardless of the type of loan (public or private) and the benefits your lender may provide, you have the ability to make monthly loan payments through early withdrawals from your service award* during service. You may request a monthly early withdrawal of up to 75% of your monthly service award to make payments on bills during service. These allotment payments do not go into effect until you have completed training and have sworn-in as a Volunteer (a three-month process), so you will need to plan accordingly. Two months before your departure for service, you will have the opportunity to set up payments, or you can set them up once you are in-country. For more information on Volunteer allowances, see Benefits or About Service FAQs.

*readjustment allowance

2. Loan forgiveness

If you have a federal loan, Peace Corps Volunteer service is considered qualifying employment for the Department of Education's Public Service Loan Forgiveness (PSLF) program. If you are working full-time for a qualifying employer, PSLF forgives the remainder of certain federal loans after 120 monthly payments are made under a qualifying repayment plan. Under a qualifying repayment plan, your payments could be $0 per month while volunteering. Signing up for PSLF at the beginning of your service allows you to make the greatest number of qualifying payments.

3. Loan deferment

If you have Federal Direct Loan, you may be eligible for loan deferment. A Federal Direct Loan is a specific subset of federal loans issued by the U.S. Department of Education. New student borrowers now receive only Direct Loans. Older federal loans include Federal Family Education Loans and Perkins loans.

If you have a Federal Direct Loan you can apply for an economic hardship deferment for the period of your Peace Corps service and then use the service award you receive after finishing your service to make a lump-sum payment on your direct loan. For most borrowers serving in the Peace Corps, declining the deferment and continuing to make monthly payments under an income-driven repayment plan will result in more PSLF-qualifying payments at a significantly lower cost to the borrower than using the transition payment.

No matter what type of loans you have, contact your lenders as soon as you accept your Peace Corps invitation to see what options are available to you.

For information about federal loans, visit the federal student aid website at Home | Federal Student Aid Find your federal loan servicer at Who’s My Student Loan Servicer? | Federal Student Aid to determine what type of loans you have and if they are eligible.