6 Ways to Manage Your Student Loans in the Peace Corps

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Peace Corps Student Loan

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If you want to make a difference in the world and immerse yourself in another culture, you may be considering signing up for the Peace Corps. For more than 50 years, the program has placed volunteers abroad to serve communities in need.

The Peace Corps and student loans don’t seem to go together in a lot of minds, though. You won’t make a lot of money in the Peace Corps, so the idea of paying off your education debt might seem even more far-fetched.

Luckily, the Peace Corps and loan forgiveness, deferment and other repayment options do jibe. The international service program carries many unique benefits that can assist federal and private loan borrowers, including…

1. Peace Corps deferment on federal loans
2. Income-driven repayment for federal loans
3. Perkins loan cancellation
4. Peace Corps Loan Forgiveness via PSLF
5. Peace Corps deferment (or forbearance) for private loans
6. Pretax volunteers award

Plus, learn about:

1. Peace Corps deferment on federal loans

If you have federal student loans, you’re in luck.

By joining the Peace Corps, you may be eligible for a Peace Corps student loan deferment during your term of service for up to three years.

Suzie Talbot, who joined the Peace Corps and served in Mongolia from 2012 to 2014, told Student Loan Hero that she deferred her education debt during her term.

“After filling out the deferment paperwork and providing a letter for proof of service, I didn’t have to worry about them for the following two years,” Talbot said.

Realize, though, that if you don’t have subsidized loans, interest will likely continue to accrue. At the end of your service, the interest (if you haven’t kept up with interest payments) will be added to your loan balance, potentially costing you more.

2. Income-driven repayment for federal loans

You can also apply for income-driven repayment (IDR), where your payments could be as low as $0 while you’re serving with the Peace Corps.

Given your “volunteer” status and small stipend, you’d likely qualify to pay nothing during the duration of your service. However, interest accrues on all loans being paid via IDR, potentially making your loans more expensive to repay.

Tips on the Peace Corps and student loan repayment:
● Make sure you remain in contact with your servicer while you’re overseas, and that you recertify for any programs in which you’re participating.
Appoint a power of attorney who can take care of the paperwork or is able to communicate on your behalf. You need to ensure that someone can act for you while you’re out of the country, perhaps living where internet and phone service can’t be counted upon.

3. Perkins loan cancellation

If you have federal Perkins student loans and serve in the Peace Corps, you could be eligible for partial loan cancellation.

The amount varies depending on terms of service, but you could have between 15% and 70% of your student loan balance canceled. You receive a partial cancellation of principal and interest for each 12-month stint you complete, up to four years. You may need proof of service to qualify.

Years in the CorpsForgiveness Amount
115%, plus interest
215%, plus interest
320%, plus interest
420%, plus interest

4. Peace Corps Loan Forgiveness via PSLF

Just joining the Peace Corps and serving doesn’t guarantee that you’ll receive student loan forgiveness — you can still use the stipend you receive to pay off a chunk of your student loans if you want.

Notably, service in the Peace Corps can count toward qualifying for Public Service Loan Forgiveness (PSLF). If you have student loans under the William D. Ford Federal Direct Loan program, any student loan payments you make while part of the Peace Corps count toward the 120 qualifying payments for PSLF. You can confirm your eligibility by writing to [email protected].

Make sure you have direct loans or a direct consolidation loan before you join. Then, either make your full payments or get on an IDR plan before you leave. Make your required payments, and you could get up to 27 qualifying payments during your term in the Peace Corps.

Of course, you’d need to pursue a career with a government agency or qualifying nonprofit once you’ve finished, as you’ll still need 93 more qualifying payments to receive forgiveness under PSLF.

Since working on Peace Corps missions could help you land a job in the public sector, though, you have a good chance of continuing employment designed to help you receive PSLF.

While discussing PSLF, it’s important to note that it has so far been approved for less than 1% of applicants. Take that into consideration as you look at your options.

5. Peace Corps deferment (or forbearance) for private loans

If you’re repaying private student loans, unfortunately, you aren’t eligible for as many benefits as you are 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 — however, your loans will most likely still gain interest. Each private student loan servicer is different, so ask about what options are available.

Ultimately, 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 as much of your private student loans as possible before you serve.

6. Pretax volunteers award

Current Peace Corps volunteers are awarded more than $10,000 (pretax) after serving their initial term of 24 months. This can help volunteers transition back to the States and acclimate to U.S. life. This money can be used for anything legal.

That sum could be used as a deposit for an apartment or a savings boost. However, if you’ve got rent and savings covered, it can also be a lump-sum student loan payment. This is another way the Peace Corps might help pay off student loans.

Peace Corps, student loans can go hand in hand

After serving in the Peace Corps, your college 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.

Additionally, review your student loan status with the StudentAid.gov to make sure your employment certifications for the last two years with the Peace Corps are recorded. This will help you if you’re working toward PSLF.

Other volunteers opt to pursue higher education after their service. According to Talbot, her Peace Corps experience helped her secure funding to pursue a degree at New York’s Brooklyn Law School.

“My Peace Corps experience helped me significantly with the transition into law school,” she said. “I had a minimal income to report to FAFSA and received significant scholarship and grant money, totaling the full cost of my tuition, which I don’t believe would have been possible without my Peace Corps experience.”

Whether you decide 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 the vocation of service.

Your options include AmeriCorps, which would turn your service into student loan aid without leaving the U.S.

Peace Corps student loan FAQs

How much do Peace Corps volunteers get paid?

Before deciding to join the Peace Corps, it’s important to understand how much you might be paid.

While it’s not exactly volunteering — since you do get paid — the stipend isn’t that much. You receive housing and a living stipend that should allow you to live in a style similar to the local area where you serve. You might also receive more than $10,000 at the end of your service to help you adjust to post-Peace Corps life.

As you can see, Peace Corps terms mean you probably won’t earn enough to cover your student loan payments, so it’s important to understand your options.

Does the Peace Corps pay for college?

If you’re in the midst of your degree program, you might be less interested in repaying student debt and more focused on covering upcoming tuition costs. Unfortunately, the Peace Corps doesn’t directly pay its volunteers’ undergraduate costs (beyond the $10,000, pretax award upon the end of your Peace Corps term).

With that said, joining the Peace Corps could lead to financial assistance for graduate school via the Paul D. Coverdell Fellows program. It connects past Peace Corps volunteers with tuition discounts, stipends and assistantships at 90-plus colleges and universities.

Andrew Pentis and Miranda Marquit contributed to this report.

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1 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of Feburary 1, 2021.

2 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of October 26, 2020, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 10/26/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.

© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.

3 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 02/17/2021 student loan refinancing rates range from 1.91% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.

4 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 2.99% APR to 7.33% APR (with AutoPay). Variable rates from 2.25% APR to 6.88% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.25% APR assumes current 1 month LIBOR rate of 0.13% plus 2.37% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The discount will not reduce the monthly payment; instead, the interest savings are applied to the principal loan balance, which may help pay the loan down faster. Enrolling in autopay is not required to receive a loan from SoFi. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.  

5 Important Disclosures for Laurel Road.

Laurel Road Disclosures

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.

As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
  2. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
  3. After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.
  4. Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster.

Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.

Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.

Interest Rate: A simple annual rate that is applied to an unpaid balance.

Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.


This information is current as of January 4, 2021. Information and rates are subject to change without notice.