Categorized | College

Tags :

Instructions for Student Loans

Posted on 14 August 2008

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 will help you to take advantage of the full range of benefits to which you are entitled.

Remember that it is your responsibility to apply for student loan deferment. YOU must contact your lending institution(s) and request appropriate forms.

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. Please 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 may defer principal payments on your Perkins Loans, NDSL loans, Federal Direct Loans, Federal Consolidation Loans, and Stafford Loans (Guaranteed Student Loans or GSLs).

Even though your principal payment is deferred, you must make interest payments on the following unsubsidized loans during your Peace Corps Service: Stafford Loans, Consolidation Loans that include unsubsidized loans, and 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 Consolidation Loans that consolidate only subsidized Stafford Loans.

The Department of Education does not charge interest during the period of deferment for Perkins Loans and subsidized Direct Loans. Please read below for additional details about specific types of student loans.

Volunteers may authorize payments of up to $100 per month from their readjustment allowance to cover interest due on their student loans.

We strongly recommend giving Power of Attorney to a family member or friend to handle your loan deferments while you are in Peace Corps. If questions arise about the account, it is advantageous to have a local contact.

Please note that the role of the Peace Corps 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.

If you have any further questions concerning your loan deferments, please feel free to contact VRS/Legal Office at 1-800-424-8580, ext. 1845, or (202) 692-1845.

Details on Specific Loans

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.
  • 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.

Direct Loans
(William D. Ford 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 Direct Loans during the deferment period.
  • Volunteers with unsubsidized Direct Loans must pay interest during service or apply to the Department of Education for forbearance.

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.
  • Volunteers with unsubsidized Stafford Loans must pay interest during the deferment period or apply to their lender for forbearance on interest payments. The availability and terms of forbearance are entirely at the lender’s discretion.

Consolidation Loans

  • Volunteers with Consolidation Loans qualify for a deferment of principal payments for up to three years during service.
  • The Department of Education pays interest on Consolidation Loans that consolidate only subsidized Stafford Loans.
  • Volunteers with Consolidation Loans that include unsubsidized loans must pay interest during the deferment period or apply to their lender for forbearance on interest payments. The availability and terms of forbearance are entirely at the lender’s discretion.

This post was written by:

- who has written 318 posts on Higher Education and Career Blog.


Contact the author

2 Comments For This Post

  1. Liza says:

    Hi,
    Thanks Khan!
    Some time ago I was searching a good photography school and recourses of funds. SchoolPursuit(dot)com gives me the complete list of my choice of schools and you give me the guidance for student loans.
    Thanks

    Liza

  2. Foreclosure refinance says:

    I like your post. You make some good points. Unfortunately, right now lenders are not willing to take the risk of giving loans to consumers. Without loans, consumers and businesses will have trouble financing themselves and the circle will keep going on.

    I like your post. You make some good points. Unfortunately, right now lenders are not willing to take the risk of giving loans to consumers. Without loans,.t willing to take the risk of giving loans to consumers. Without loans, consumers and businesses will have trouble financing themselves and the circle will keep going on.

Leave a Reply

*