Yes, you can serve in the Peace Corps with outstanding financial obligations if the debts can be managed and/or paid in a timely way during service.
You may request an allotment or multiple allotments of up to 75% of your monthly readjustment allowance to make payments on bills during service. These allotments must be paid directly to the company that holds the debt. These allotment payments do not go into effect until you have completed training and have sworn-in as a volunteer, so you will need to plan accordingly. Two months before your departure, you will have the opportunity to set up such allotments, or you can set them up once in-country.
Two months before your departure you will have the opportunity to designate a financial point of contact. This gives Peace Corps the ability to discuss and release financial information to the designated individual while you are serving as a volunteer. However, this is different from a power of attorney. A third party, like a lender, may need you to assign a power of attorney for someone to speak to them on your behalf.
Two months before your departure, you will have the opportunity to download and print certification letters. You can also request certification during service from your in-country staff or you can email [email protected]
Your readjustment allowance and a portion of your monthly in-country living allowance are considered taxable income and W-2 forms will be sent to you in-country. You can file your taxes yourself or have them filed by someone else. Two months before your departure, you will have the option to designate a financial point of contact to whom the Peace Corps would release a copy of your W-2. Consult a tax adviser for additional information.
You are responsible for your student loans during service. Depending on the type of loan you have there may be benefits available to you, including deferment, partial cancellation, income-driven repayment, or forgiveness. Learn more about student loan information.
In some cases, yes. Check with your lender to discuss what will happen with your loans once they are deferred. Volunteers might have to pay interest on unsubsidized loans during service, including Stafford Loans, Federal Consolidation Loans that include unsubsidized loans, and Federal Direct Loans.
Contact your lender to find out when they will accept your application for a deferment. If your lender says you must wait until the grace period expires to send in your application for deferment, wait until that time. Bring the paperwork with you to service and submit at the right time from there, or leave the paperwork with your power of attorney to submit on your behalf.
To renew your loans for deferment, you will need to submit a new deferment application with your loan provider shortly before the deferment expires. This application will also need a certification letter from Peace Corps. You can request this certification letter from your Peace Corps staff in country or by emailing [email protected]