Student Loan Deferment / Cancellation Frequently Asked Questions

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[edit] Who is responsible for my student loans while I am serving in the Peace Corps?

You (or your power of attorney) are completely responsible for your loans. All matters of deferment, payment, reactivation, and cancellation of loans following your service are your responsibility.

[edit] Will the Peace Corps pay down my student loan(s)?

The Peace Corps does not pay student loans. Your student loans are your responsibility. However, the Peace Corps does make it possible to apply up to 75 percent of your readjustment allowance each month toward debt repayment. The current maximum monthly payment is $168.75. Many Volunteers use this to pay the interest on their unsubsidized loans; arrangements can be made during pre-service training.

[edit] Will my student loan(s) get cancelled when I enter on duty?

Only Volunteers with Perkins loans are eligible for a partial cancellation benefit. Fifteen percent of your Perkins loans can be cancelled upon the completion of each full year of service during your first two years of service, and 20 percent can be cancelled upon completion of each of the third and fourth years. Therefore, four full years of service would equal a 70 percent cancellation of your existing loan. You can apply for cancellation at the end of each completed 12 months of consecutive service. A Volunteer must serve one complete year (365 days) in order to qualify for this cancellation benefit. Partial years of service will not qualify. Please note that you cannot receive partial cancellation of your Perkins loan if you have consolidated it with any other loan.

[edit] Does the Peace Corps provide loan deferment(s)?

The Peace Corps does not defer student loans, nor does it provide loan deferment applications. To get your loans deferred, you must apply to your lending institution(s). Always contact your lenders directly to get the specific details of what they require.

[edit] Can I have my student loans deferred while I am serving in the Peace Corps?

That depends upon the policies of your lending institution(s). The Peace Corps does not have the power to grant loan deferments; we can only verify that you are in the Peace Corps serving as a Volunteer. It is at the discretion of your lender whether or not deferments are granted for Peace Corps service. Check with your lending institution(s) to determine if Peace Corps service makes you eligible for deferment.

[edit] What is the difference between forbearance and deferment?

Deferment means that your loans do not have to be repaid until after your service. If your loans are subsidized, you will not have to pay interest. Forbearance also means that you do not have to repay your loans until after your service, but interest may accrue. To determine what is necessary to ensure your loans are deferred, contact your lending institution(s) and ask them what forms you must complete.

[edit] What forms do I need to defer my student loans?

Different lenders require different forms so all forms must be obtained directly from the lending institution(s). The Peace Corps does not have a “universal” loan form. Complete the form(s) provided by your lending institution(s) and bring it/ them with you to your staging (pre-departure orientation). At staging, Peace Corps staff will provide a letter verifying that you have officially begun your service in the Peace Corps. You may then mail your deferment form(s) and verification letter(s) to your lender(s).

[edit] I called the lending institution, and they sent me this form. Is it the right one?

Sometimes lending institutions mistakenly send incorrect forms. You must read the application carefully to determine whether or not you fit the criteria. Two forms that often cause confusion are for Direct Loans. One form is an economic hardship deferment request; the other is the Peace Corps or public service deferment request. The public service deferment request form states at the top that you must have received your loan before July 1, 1993, to receive this type of deferment. Only you will know if you fit the criteria indicated. Most Volunteers apply for economic hardship deferment since most current Volunteers received their loan(s) after July 1, 1993. However, if, for example, you received loans that fall within the periods specified by both forms, it may be best to complete both forms. Some Volunteers who received part of their loans before July 1, 1993, have filled out one form and discovered that loans after that period did not get deferred. Always read your application forms carefully to determine if they are applicable to you.

[edit] I am still within my grace period. Should I fill out the form(s) and send it out anyway?

You should always contact your lenders to find out when they would like your application for deferment. Some Volunteers have sent their deferment application(s) to their lender(s) during the grace period, and the loans were not deferred. If your lender says you must wait until the six-month grace period expires, wait until that time. Bring extra forms with you and have an official in-country sign them or leave the forms with your power of attorney.

[edit] Can interest accrue on deferred loans?

In some cases, yes. Check with your lending institution(s) to discuss what will happen with your loans, once deferred. Interest on subsidized loans is paid by the Department of Education, provided your loan(s) is/are successfully deferred. Failure to do so may result in a defaulted loan. Interest on unsubsidized loans may have to be paid by the Volunteer during service.

[edit] Should I mail my deferment forms to the Peace Corps?

No, you should bring them with you to your staging (predeparture orientation).

[edit] How will I get my deferment form(s) certified?

When you arrive at staging, have your deferment forms with you. Make sure that you have contacted all of your lenders to request the forms or that you have downloaded them from the Internet as directed by the lender. A certifying officer will sign your forms at staging and give you a letter that certifies your projected dates of service. It is recommended that you make copies of all forms and the certification letter for your records or to send to your power of attorney.

[edit] Will the Peace Corps send/mail out my deferment form(s)?

The Peace Corps will not mail out your forms. They will be given back to you at staging, and you are responsible for mailing them to your lending institution(s).

[edit] Do I need to reapply for a loan deferment while I’m serving in the Peace Corps?

Check with your lender(s). Many loans require renewal each year.

[edit] How do I reapply for a loan deferment while I’m serving in the Peace Corps?

You can do one of two things: either bring extra forms with you and fill them out in-country, having an in-country official certify them for you; or designate someone at home as your power of attorney and have this person sign for you and send the forms to Peace Corps headquarters to be signed by the certifying officer.

[edit] I was told that I need to reapply for deferment in one year. Can my parents do that for me? Who should they contact at Peace Corps to do this?

Your parents will only be able to request loan deferment paperwork from Peace Corps if you have signed the Privacy Act Waiver included in the Invitation Kit and submitted it at your staging event. If you have given this signed consent, the designated party can contact Volunteer & PSC Financial Services to request the appropriate documentation for the continuation of your deferment. The address is: Paul D. Coverdell Peace Corps Headquarters Attn: Certifying Officer Volunteer & PSC Financial Services 1111 20th Street, 2nd Floor, NW Washington, DC 20526 800.424.8580 x1784

[edit] I have just completed service. I didn’t apply for deferment before my service, and now I owe interest. Can I apply for it now?

That depends on the policies of your lending institution(s), but they will likely say it is too late. You are encouraged to make all of your arrangements before you leave the United States for service in the Peace Corps.


[edit] External Links

Student Loan Deferment / Cancellation Frequently Asked Questions Official US Peace Corps Website

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