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Does the Peace Corps offer student loan forgiveness?

While it doesn't have it's own program, it can help you qualify for PSLF.

The Peace Corps may not offer student loan forgiveness on its own, but it can help you qualify for two federal forgiveness programs — and reduce the amount you have to pay while you’re volunteering abroad.

Does the Peace Corps offer student loan forgiveness?

No, the Peace Corps doesn’t have a student loan forgiveness program. However, volunteering with the organization counts toward the service requirement for Public Service Loan Forgiveness (PSLF) and Perkins Loan cancellation.

In addition, the low income that comes with being a Peace Corps volunteer means you could qualify for $0 monthly payments on your federal loans while on an income-driven repayment (IDR) plan. And if you don’t want to have to worry about repayments at all, you also have the option to defer your federal loans until you’ve finished your Peace Corps service. However, interest might add up during this time depending on the type of loan you have.

You can also use your transition payment — which can be over $10,000 — to pay off your federal and private student loans. This is given to all volunteers after they’ve completed their volunteer commitment to help with the transition to life back home.

The US Department of Education has compiled a handy guide to federal loan repayments for Peace Corps volunteers — including two sample repayment scenarios.

Does the Peace Corps offer any other financial assistance?

In addition to potentially qualifying for income-driven repayments, volunteering with the Peace Corps also comes with:

  • Housing and living stipend. You’ll receive a stipend that reflects the standard of living of the community you’re volunteering in, as well as housing. Depending on your location, you may stay with a host family or have private accommodations.
  • Free transportation to and from your host country. You’ll also receive two paid vacation days each month. However, travel around your country and to other countries is at your own expense.
  • Medical and dental benefits. During your service, you’ll have access to both medical and dental care free of charge. And if you have any health issues that can’t be treated in your host country, the Peace Corps will bring you to a nearby country or the US.

Must read: Don’t forget to stay on top of your private student loans

Some private lenders may offer deferment or forbearance when you join the Peace Corps, but don’t assume it. Check with your lender before traveling abroad to make arrangements.

If you are able to postpone payments, keep in mind your loans will likely still accrue interest. And the interest that adds up will be added to your loan balance, making your loan more expensive in the short and long term.

How to use transition funds to pay off your student loans

While you don’t have to use your transition funds to pay off your student loans, you might want to consider it. Making a large payment toward your principal balance will reduce the amount of interest that accrues each month and make your loan cheaper in the long run. You can reach out to your servicer — the company you make repayments to — for instructions.

However, if you plan on pursuing PSLF, don’t make a large lump-sum payment. To make the most of this program and get the maximum amount of debt forgiven, continue to make just the minimum repayments required each month.

How to qualify for Public Service Loan Forgiveness through the Peace Corps

If you have federal Direct Loans, your service with the Peace Corps can contribute to the 10-year public service requirement needed to qualify for Public Service Loan Forgiveness. Follow these steps to begin the process:

Step 1: Check that your federal loans are eligible

Federal Direct Subsidized, Unsubsidized, Consolidation and PLUS Loans taken out by graduate or professional students are all eligible for forgiveness. If you have Parent PLUS Loans, you’ll need to consolidate them with a Direct Consolidation Loan first in order to qualify.

Step 2: Change to an income-driven repayment plan

You must be on an income-driven repayment plan to qualify for PSLF:

For most volunteers, this will reduce your monthly payments to $0. In this case, you’ll need to pay the installment amount listed on your statement to have them count toward the PSLF requirement of making 120 repayments.

Step 3: Certify your employment annually

You’ll need to certify your employment each year you work in public service — not just while you volunteer with the Peace Corps. You can download a copy of the Employer Certification Form (ECF) on the Federal Student Aid (FSA) website. Once it’s complete, print it out and have your Peace Corps manager or employer sign it. Then send it to FedLoan Servicing — the federal servicer that handles all PSLF applications.

Step 4: Continue to work in public service

Serving the Peace Corps will only count as two or four years of your 10-year public service commitment needed to qualify for PSLF. Once you return to the US, continue to make on-time repayments on your Direct Loans and find a job with a nonprofit or in the public service sector.

Make sure you certify your employment each year and keep up to date on any changes to the PSLF Program to increase your chances of getting accepted.

While the process seems relatively straightforward, miscommunication in qualification requirements led to fewer than 1% of borrowers having their student loans forgiven last year. To ensure you don’t miss out, check out our comprehensive guide to how the PSLF Program works.

How to qualify for Perkins Loan cancellation through the Peace Corps

There are no steps you need to take with your Perkins Loans to qualify for cancellation other than submitting the cancellation form to your school or its servicer.

Depending on how long you serve in the Peace Corps, you may be eligible to have 15% to 70% of your loan principal and any accrued interest canceled. This means 30% of your Perkins Loans will be canceled if you complete the standard two-year service commitment. And 70% will be canceled if you complete four years of service.

Length of service in the Peace Corps% of Perkins Loans canceled
12 months15%
24 months15%
36 months20%
48 months20%

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Bottom line

The Peace Corps not only provides much-needed support to communities across the globe, but it can also get you closer to having your federal loans forgiven through PSLF. And for private student loans that don’t qualify for forgiveness, refinancing with a new lender could help you score a lower rate.

Frequently asked questions

Should I refinance my student loans?

It depends on the type of loan you have:

  • Federal loans. If you plan on applying for PSLF, Perkins cancellation or other federal forgiveness programs, don’t refinance. Doing so could make you ineligible for government-funded programs.
  • Private loans. Refinancing your student loan debt could be beneficial for private loans. It could give you access to a lender with better deferment or forbearance options, lower your interest rate or increase your loan term — all of which could help while you’re serving in the Peace Corps.

And if you have Perkins Loans, don’t consolidate — it will make you ineligible for cancellation.

Should I give a family member or friend power of attorney while I’m away?

Setting up power of attorney (POA) with a trusted family member or friend is generally recommended while you’re serving in the Peace Corps. Because communicating with your lender may be difficult during your service, a POA can handle time-sensitive matters and make repayments on your behalf.

How can I request documentation certifying I’m a Peace Corps volunteer?

The Peace Corps allows you to download and print certification letters two months before your departure. You can also request certification while you’re on site by contacting Peace Corps staff in the country you’re serving in or by emailing

Do I have to pay taxes on my Peace Corps transition funds?

Yes, you’re responsible for paying taxes on the transitions funds you receive after completing your service in the Peace Corps.

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