Complete Guide to Student Loan Forgiveness: Peace Corps and AmeriCorps Edition

Are you looking to get rid of your student loans? Did you know that you may be eligible to have them forgiven? There are a number of programs that allow you to do this, and some are better than others. Find out which programs you may be eligible for and how you can go about getting your loans forgiven in this post.

Student loan forgiveness programs can offer a way to reduce or eliminate your federal student loans. To qualify for forgiveness, you must meet certain requirements that include, but are not limited to, working for a non-profit or government organization. The Peace Corps and AmeriCorps may be the most well-known of the organizations that offer student loan forgiveness, but there are a variety of others. In fact, there are dozens of federal student loan forgiveness programs that you may qualify for. The following article will discuss the Peace Corps and AmeriCorps programs in detail.

The Peace Corps and AmeriCorps provide a great way to serve your community while earning loan forgiveness. AmeriCorps members can earn up to $4,725 in loan forgiveness for their work. As a Peace Corps volunteer, you can earn up to $7,425 in loan forgiveness after two years of service.

Well-known volunteer programs, such as the Peace Corps and AmeriCorps Volunteers in Service to America (VISTA), provide needed services and support to populations in need. They also offer volunteers the opportunity to learn about new cultures and gain experiences, as well as living and educational allowances. Volunteers receive a one-time payment at the end of their employment. These funds can be used for reintegration or for educational expenses such as student loans. In addition, Peace Corps and AmeriCorps volunteers have access to various student loan forgiveness programs that can help alleviate overall debt. Here’s what you need to know about Peace Corps and AmeriCorps student loan cancellation options.

AmeriCorps and Peace Corps Loan Benefit: Cancellation of Perkins loan

There are several types of loan forgiveness programs for AmeriCorps and Peace Corps, but a loan forgiveness benefit is available for a specific type of loan. If you have a federal Perkins loan, you can volunteer with AmeriCorps VISTA or Peace Corps to have up to 70% of your Perkins loan balance forgiven. This benefit does not apply to borrowers with private loans or other types of federal loans, such as Stafford or PLUS loans. Credits are awarded at a progressive rate that reflects the length of your volunteer work. AmeriCorps VISTA and Peace Corps volunteers received:

  • 15% off Perkins loan for each of the first two years of service.
  • 20% forgiveness of Perkins loans in the third and fourth year of service.

If you have volunteered with the Peace Corps or AmeriCorps, you can apply for a Perkins loan waiver with your school or loan officer.

Public service loans for Peace Corps and AmeriCorps volunteers

Peace Corps and AmeriCorps volunteers without Perkins loans still have access to one of the most generous federal loan forgiveness programs: Elimination of loans to public servants (PSLF). The PSLF program allows the loan to be forgiven tax-free after 120 months (10 years) of eligible payments. While each volunteer program generally has a service limitation, you can plan to volunteer and then find a public sector job with a government or nonprofit organization to make 10-year payments that meet PSLF requirements. To be eligible for PSLF, you must be a full-time AmeriCorps VISTA volunteer in the Peace Corps and have direct credits under the installment plan. There are two ways to get PSLF credit for your volunteer work. But each pathway affects how the number of payments eligible for the PSLF is determined.

Route 1: Receipt of a deferral or lump sum payment

Peace Corps and AmeriCorps-VISTA volunteers may request a deferment or economic deferment for the duration of their service. You don’t pay during your service, but you must use your bridge award (or Segal AmeriCorps Scholarship) to make a one-time payment on your direct loans after your service ends. This method has a number of limitations, including:

  • The lump sum must be paid within six months of receiving the transitional allowance or training allowance.
  • The number of eligible payments is determined by dividing the amount of your lump sum payment by the amount of your monthly payment at the time you committed to serve (i.e., before the deferral or payment plan took effect).
  • You can only receive up to 12 PSLF-eligible payments, even if you have been employed longer.

While deferring or waiving is an option, it is not the most advantageous way to receive PSLF credit for your service. Instead, Peace Corps and AmeriCorps volunteers should consider Income Driven Reimbursement (IDR) plans that significantly reduce their monthly payment and directly count towards the PSLF.

Route 2: IDR payments during term of service

Since your income as a volunteer will be very limited, most Peace Corps and AmeriCorps VISTA volunteers do well to enroll in an IDR plan and make regular, one-time payments during their service. Depending on your IDR plan, you can expect to pay only 10% to 20% of your discretionary income each month. Depending on your income and family size, you can get a monthly payment of up to $0. IDR plans include:

  • Continued payment of wages (PAYE)
  • Revised Pay As You Earn (REPAYE) programme
  • Income-related reimbursement (IRR)
  • Income-related repayment (IBR)

Unlike the deferral or moratorium option, which is limited to 12 months, you can get lifetime full credit for payments that meet the PSLF. There is no limit to the number of months you can earn credits through this route, as long as you meet all other PSLF requirements. Additionally, most volunteers will save money on the IDR route, as payments are capped based on your limited volunteer income. However, if you apply for a bridging or education allowance, you will have to pay an amount based on your income before the volunteering period and a repayment schedule that may be significantly higher.

IDR forgetting capabilities

The cancellation of IDR is another reason why it is better to make income-based payments during volunteering rather than opting for an installment plan. If you don’t plan to work for a PSLF eligible employer after you leave the Peace Corps or AmeriCorps (or if you have no idea what your future path will be), you have additional insurance to pay off your loans. Finally, each payment (even if it is $0) helps to shorten the total IDR cancellation period.

By continuing to make low monthly payments under your IDR plan, you may qualify for forgiveness of the federal loan balance in 20 to 25 years, depending on your IDR plan. However, this type of loan forgiveness is tax deductible, so set aside some money for a possible tax deduction. It should be noted that a provision in the U.S. stimulus package temporarily exempts student loans repaid through December 2025 from income tax.

Make a plan to pay off your student debt while volunteering

Whether you have private or federal student loans, you must repay your student debt while serving in the Peace Corps or as an AmeriCorps VISTA volunteer. Have a solid repayment plan in place during and after your service. Our team of student debt experts can help you plan your volunteer work and beyond. We work with you to create a personalized student loan repayment plan that meets your personal and financial goals. Schedule a one-hour consultation or email us in the comments with general questions. A plan for a student loan Refinance your student loan and receive a bonus in 2021.

Frequently Asked Questions

Does AmeriCorps forgive student loans?

AmeriCorps members make a commitment to serve their country, their communities and their families. With that comes the expectation that those who serve will make a lasting impact on the communities they serve. Many AmeriCorps members are young, recent graduates of high school, or fresh out of college. Some members are older, serving as retirees. In addition to the impact AmeriCorps members make in their communities, they also have the opportunity to make an impact on their finances.

AmeriCorps is an organization that offers volunteer opportunities for those who want to give back to the community. AmeriCorps members can participate in a variety of programs from serving in the military, to helping with disaster relief, to teaching, to working with children and youth. AmeriCorps also has a special program called AmeriCorps VISTA, where members can serve full-time for a year and receive a Segal Education Award. This award will pay up to $5,550 a year toward the member’s student loans.

Does Peace Corps forgive student loans?

The Peace Corps has an interesting program that allows you to do some good for the world, while also putting your student loans into forgiveness. This means you will not need to make any of your student loan payments for the duration of your service. In exchange, you will be assigned to a location where you will fulfill one of the following roles: (1) Education Volunteer; (2) Health Volunteer; or (3) Business and Microenterprise Volunteer. As an education volunteer, you will teach in a primary school, tutor a community leader, or provide after-school tutoring to community members.

As a health or business volunteer, you will work in medicine, HIV/AIDS education, or business development. As you can see, these are I have been doing a lot of research on the topic and I was wondering if everyone’s reactions are the same as mine. I want to serve. I want to give back. I just want to know that when I am 50 I can still get a job. I am not a political person, and I am not looking at this as a party thing. I want to do what is right. I want to know that when I am 50 years old I can get a job. I have been doing a lot of research online, I have been on the phone with the Peace Corps, and I have been in an argument with my Congressman’s office. I have a couple questions for everyone.

Does AmeriCorps count towards public service loan forgiveness?

The short answer is: yes, AmeriCorps does count for public service loan forgiveness. In the past, it was unclear whether the hours students spent in AmeriCorps counted toward their required 1040 hours of qualifying public service. Recently, however, the Department of Education revised its language to clarify that AmeriCorps volunteers are, in fact, eligible for the program. They’re still not required to count AmeriCorps hours toward the 1040, but they can if they want to.

While there is no doubt that public service loan forgiveness is a great benefit for those who work in public service, it is not always so easy to tell if AmeriCorps will count to make sure your loans eligible for this benefit. In general, AmeriCorps is considered a qualifying public service program. The main thing to keep in mind is that AmeriCorps will only count if you served a full-time term, which means that you must have served for a year between AmeriCorps and some other program that is also eligible for public service loan forgiveness.


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