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. The program, which places volunteers abroad to serve communities in need, has been around for more than 50 years.
Student loans and Peace Corps 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 paying off your student loans might seem like a pipe dream if you follow your heart.
Luckily, the Peace Corps program has several unique benefits that can assist student loan borrowers. Here are five things to know about student loans in the Peace Corps.
How much do Peace Corps volunteers get paid?
Before deciding to join, 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, you probably won’t earn enough to cover your student loan payments during your time, so it’s important to understand your options.
- Federal student loan deferment
- Perkins loan cancellation
- Public Service Loan Forgiveness
- Private student loan deferment or forbearance
- Pretax volunteers award
Suzie Talbot, who joined the Peace Corps and served in Mongolia from 2012 to 2014, said her student loans were deferred 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,” she 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.
You can also apply for an income-driven repayment plan, where your payments could be $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.
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.
If you have Perkins 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.
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.
However, service in the Peace Corps can count toward qualifying for Public Service Loan Forgiveness. 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.
Make sure you have direct loans or a Direct Consolidation Loan before you join. Then, either make your full payments or get on a income-driven repayment 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 certain 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 been approved for less than 1% of applicants. Take that into consideration as you look at your options.
If you have 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 your private student loans as much as possible before you serve.
Current Peace Corps volunteers are awarded more than $10,000 (pretax) after serving their initial term of 27 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 have rent and savings covered, it can also be a lump-sum payment toward your student loans. This is another way the Peace Corps might help pay off student loans.
After serving in the Peace Corps, 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 National Student Loan Data System 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 a life of service.
Miranda Marquit contributed to this article.
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1 Important Disclosures for Earnest.
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2 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.
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4 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.
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