Volunteers who have outstanding debts under one of
the federally administered or guaranteed student loan
programs qualify for certain relief during their Peace
Corps service. The regulations that authorize this relief
are complicated, and different rules apply to each type
of loan.
The summary below and the information on the reverse
side will help you to take advantage of the full range of
benefits to which you are entitled.
Loan Deferment
It is your responsibility to apply for student loan deferment.
YOU must contact your lending institution(s)
and request appropriate forms. Take your deferment
papers to staging with you; do not send them to the
Peace Corps. The Peace Corps cannot verify that you
are a Volunteer until you arrive at staging.
Student loans may be deferred for the full period of your
Volunteer service, up to 27 months. Your lender may
grant you a deferment for the full 27 months, or require
you to reapply for a deferment every 12 months. You
must contact your lender to determine the length of
your deferment. If you extend your service, deferral of
up to three years is available, but you must apply for this
separately. Your country director will certify deferment
forms for the second, and possibly third years of service.
Take extra deferment forms with you if your deferment
must be certified annually.
When determining benefits that are available, you must
consider each type of loan and the principal and interest
components individually. You can defer principal payments
on Perkins Loans (National Direct Student Loans
[NDSLs]) and Federal Direct Loans (including Federal
Consolidation Loans, Stafford Loans, and Guaranteed
Student Loans [GSLs]).
Interest Payments
Even though your principal payment is deferred, you
must make interest payments on the following unsubsidized
loans during your Peace Corps Service: Stafford
Loans, Federal Consolidation Loans that include unsubsidized
loans, and Federal Direct Loans. You may opt
to apply to your lender for forbearance on the interest
payment for these loans.
The Department of Education pays the interest during
the period of deferment for subsidized Stafford Loans
and subsidized Federal Consolidation Loans.
The Department of Education does not charge interest
during the period of deferment for Perkins Loans and
subsidized Federal Direct Loans. Please refer to the
chart on the reverse side for details about specific types
of student loans.
As a Volunteer, you may authorize payments of up to
$168.75 per month from your readjustment allowance
to cover interest due on your student loans.
Privacy Act Waiver
The Peace Corps strongly recommends signing
the
Privacy Act Waiver enclosed in the Invitation Kit. The
Privacy Act Waiver gives the Peace Corps the ability
to discuss and release financial information to a family
member or friend that you designate. If questions
arise about your student loan in your absence (i.e.
request for service verification for deferment or
payments made to your loan from your readjustment
allowance) it is advantageous to have a local contact
to handle these issues. If you do not have a signed
Privacy Act Waiver on file with Peace Corps, we will
not discuss your student loan or financial issues with
anyone other than yourself.
The Peace Corps' Role
The Peace Corps' role in the loan
deferment process
is limited to certification of your dates and country
of service and authorization of deductions from your
monthly readjustment allowance. The Peace Corps does
not grant or deny deferments of loans.
Loan Types and Benefits
Perkins Loans
- Volunteers qualify for a 15 percent loan cancellation
for each of their first two years of service and a 20
percent loan cancellation for their third and fourth
years of service. Up to 70 percent of a Perkins Loan
may be canceled. It is important to note that a Volunteer
must serve one complete year (365 days) in
order to qualify for this cancellation benefit. Partial
years of service will not qualify.
- If you consolidate your Perkins loan
with other
student loans, you will lose the cancellation benefit.
Once a Perkins loan is consolidated, it is no longer
considered a Perkins loan and therefore, is ineligible
for cancellation. If you are looking to combine several
student loans, do not include the Perkins loan if you
are interested in the cancellation benefit.
- The Department of Education
does not charge interest
during the deferment period.
- Volunteers qualify for a deferment of principal
payments
during their Peace Corps service and for six
months immediately after their service ends. For
Perkins Loans obtained before July 1, 1993, this relief
is limited to three years of Peace Corps service, but
for loans obtained on or after that date, it is available
for the entire period of a Volunteer’s service.
Stafford Loans Guaranteed Student Loans
or GSLs
- Volunteers qualify for a deferment of principal payments
for up to three years during Peace Corps
service.
- The Department of Education pays interest on subsidized
Stafford Loans during the deferment period.
Federal Direct Loans
- Volunteers qualify for a deferment of principal
payments
for up to three years during Peace Corps
service.
- The Department of Education does not charge interest
on subsidized Federal Direct Loans during the
deferment period.
- Volunteers with unsubsidized Federal Direct Loans
must pay interest during service or apply to the Department
of Education for forbearance.
Federal Consolidation Loans
- Volunteers with Federal Consolidation Loans
qualify
for a deferment of principal payments for up to three
years during service.
- The Department of Education pays interest on subsidized
Federal Consolidation Loans.
- Volunteers with Federal Consolidation
Loans
that include unsubsidized loans must pay
interest during the deferment period or apply to
their lender.
- If you have consolidated your loans or are thinking
about doing so before you leave, it is important
to discuss with your lender how this will affect
your Peace Corps loan deferment/cancellation
benefit. Some loans may not qualify for deferment
once consolidated but will instead be placed in a
forbearance status where the borrower is still
expected to pay interest payments during their service.
Be sure to verify all the details with your lender before
attending Staging.
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