The student loan situation in the United States seems a bit dire. Total student loan debt in the country has surpassed $1.4 trillion. Many graduates looking to pay back their student loan debt face an uphill battle. Even for those students who find employment after school, the mental and economic pressures of a student loan can become overwhelming. But what can a borrower do?
For some borrowers, there is considerable hope by the way of loan forgiveness. Typically, loan forgiveness is targeted to those individuals who are working in high-demand, low-pay public careers, and forgiveness programs are usually hard to qualify for. However, there is one company that is often overlooked as a possibility for loan forgiveness: the Peace Corps.
Forgiveness Through the Peace Corp?
Yes, that Peace Corps, the volunteer organization that utilizes young adults to work in some of the toughest and most exotic places in the world on behalf of the U.S. government. The Peace Corps has long been a great option for those who are looking to travel the world. For those in the know, the Peace Corps also offers the potential to qualify for loan forgiveness to some degree.
What Are the Details?
Through the Peace Corps, individuals who qualify can cancel up to 70 percent of a Perkins loan. 15 percent of the student loan is forgiven each year after completing your two years of service. An additional 20 percent is cancelled each year during the third and fourth year. As great as this sounds, it does have some catches.
First, your student loan debt must be a Perkins Loan, which are federal student loans available only to students who demonstrate an exceptional financial need. Perkins Loans are limited, and an undergraduate student can only take out $27,500 during their entire degree, with a max of $60,000 for students that are pursuing both an undergraduate and graduate degree.
Second, your eligibility is strictly calculated. You must devote an entire calendar year in order to count the service towards forgiveness eligibility, and the initial three months of training does not count towards the loan forgiveness. Furthermore, for the two years of service to count they must be two full years, there is no partial credit or pro-rated days of service. That is strict, but for those who are committed to the program, the benefits can be amazing.
Lastly, if you have consolidated your loan, you will be ineligible. There are some great options for those who are looking to consolidate after school, but for the Peace Corps, once you commit to a consolidation loan, your Perkins loans will no longer be eligible for loan cancellation.
Now before you run off and sign up to join the Peace Corps, we need to pump the breaks just a little bit. Only a fraction of students are able to qualify for this amazing program. On top of this, Peace Corps volunteers are only given a small stipend to spend, and for many, those funds will come up a little short. You will need to have cash stacked away somewhere to support yourself.
The Peace Corps is an amazing opportunity for anyone able to volunteer, but on top of the global experience, it might also provide some relief in terms of student loans. They offer a competitive student loan cancellation program that offers up to 70 percent of loan repayment for those who qualify.
The Peace Corps is not for everyone, but for those who can dedicate four years of their young lives in a potentially hostile work environment, it might be a great option to nullify a significant portion of their student debt.