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 has been around more than 50 years and places volunteers abroad to serve communities in need.
But if you’re thinking of joining the Peace Corps student loans may be holding you back. How will you be able to pay them back while working as a “volunteer”?
Luckily, the Peace Corps program has several unique benefits that can assist student loan borrowers. Here are five different ways volunteering with the Peace Corps can help you pay off your student loans.
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 Peace Corps student loans deferment during your term of service.
“My student loans were deferred during my Peace Corps term,” says Suzie Talbot. She who joined the Peace Corps and served in Mongolia from 2012 to 2014. “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.”
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.
Yet, 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.
2. Partial Loan Cancellation
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 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.
But, 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.
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. Since working on Peace Corps mission could help you land a job in the public sector, the PSLF program is definitely a viable option for paying off your student loans.
4. Private Student Loans Deferment or Forbearance
If you have private student loans, unfortunately, you are not 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 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.
5. Life After Peace Corps with Student Loans
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 acclimate 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 lump 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.
Other volunteers, like Talbot, opt to pursue higher education after their service. According to Talbot, her Peace Corps experience helped her secure funding for law school.
“My Peace Corps experience helped me significantly with the transition into law school,” she says. Talbot currently attends Brooklyn Law School.
“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,” adds Talbot.
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.
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