Instructions for Student Loans

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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.

External Links

Instructions for Student Loans Official US Peace Corps Website