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The Peace Corps and College Loans: Everything You Need to Know
By
Gabriel Jimenez-Ekman
Gabriel Jimenez-Ekman is the Director of Content at Scholarships360. He has written over 300 articles on college admissions, financial aid, and scholarships, in addition to spearheading research projects for Scholarships360's Top Colleges resource. Gabriel graduated from Kenyon College with a degree in sociology.
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Maria Geiger is Director of Scholarship Services at Scholarships360. She is a former online educational technology instructor and adjunct writing instructor. In addition to education reform, Maria’s interests include viewpoint diversity, blended/flipped learning, digital communication, and integrating media/web tools into the curriculum to better facilitate student engagement. Maria earned both a B.A. and an M.A. in English Literature from Monmouth University, an M. Ed. in Education from Monmouth University, and a Virtual Online Teaching Certificate (VOLT) from the University of Pennsylvania.
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The Peace Corps offers many great opportunities to make positive change in the world and try out potential careers. However, they are not exactly known for their high salaries, especially since most positions are on a volunteer basis. But did you know the Peace Corps can actually help you with your student loans in other ways? Read on to see if you qualify for each method!
What is the Peace Corps?
The Peace Corps is a United States government agency that sends volunteers to countries across the world. The Peace Corps aims to help the countries interested in meeting their need for trained people, to help promote a better understanding of Americans and to help promote a better understanding of other peoples on the part of Americans.
Don’t miss: Top virtual volunteering opportunities for students
Peace Corps and federal loans
Below is a list of federal loans and the potential benefits that you may receive with those loans. It will be up to you to speak with someone directly about how these benefits may apply to you. Be sure to explore all your options thoroughly in order to identify which option is best for you.
| Loan Type | Potential options |
| Stafford Loans, Perkins Loans, Direct Loans, Consolidated Loans | Loan deferment (for up to 3 years), Partial loan cancellation, Income driven repayment plan, Public Loan Service Forgiveness Program |
Related: Subsidized vs unsubsidized federal loans: What you need to know
Loan deferment
While serving in the Peace Corps you may have the option to defer your loans. However, while deferment may feel like a good option, it’s actually not always the most beneficial option. Depending on your loan type, you may actually end up paying more for your loans if you defer them and they accrue interest.
Partial loan cancelation
Perkins Loans are a great example of how loan cancellation may work for you. Borrowers may be eligible for a substantial level of loan cancellation through the Peace Corps. If you qualify, you will see 15% of your loans, plus interest, canceled each year for the first two years of service. If you continue to serve, you’ll see 20% of your loans, plus interest, canceled each year for the remaining two. This ends up canceling 70% of your debt!
Make sure to check with both your loan servicer and your Peace Corps supervisor about your eligibility. If you are banking on Perkins Loan cancellation in your decision to serve, ensure it will come through.
Related: Finding the best student loan interest rates
Income-driven repayment plans
Income-driven repayment plans are another way to deal with your student loans while in the Peace Corps. These plans base your monthly payments based on your income. However, these are typically only available for federal loans. Check with your loan provider to see if they are an option for you.
If you aren’t receiving any compensation for your time in the Peace Corps, income-driven repayment plans could bring your payments close to $0. However, interest will accumulate under this plan. So, by the time you finish the Peace Corps, you’ll probably owe more than if you had deferred your loans.
Also see: Navigating different types of student loans
Public service student loan forgiveness
Okay, let’s take a minute to talk about Public Service Student Loan Forgiveness. Time spent serving in the Peace Corps also qualifies participants for public service loan forgiveness. This program forgives students’ debt after 10 years of making payments and working in public service. It has strict requirements, and is a huge commitment.
So, although it can be a huge opportunity, you should ensure you are ready to take it on. If you volunteer in the Peace Corps and decide you don’t enjoy public service, you won’t see any loans forgiven. You’ll have to remain on top of your service for all 10 years to qualify.
Peace Corps opportunities to pay for graduate school
The Peace Corps does not come with any guarantees for paying for grad school, but they do offer a scholarship for grad students who have completed their program. This is called the Paul D. Coverdell Fellows Program and it can provide up to a full scholarship for alumni who are attending grad school. You shouldn’t enter the Peace Corps banking on winning this program, but if you are an alumnus, it’s a great opportunity to look into.
Check out: Student Loan Definitions