First, this loan forgiveness only applies to Perkins loans, a type of federal loan that is available only to students with “exceptional financial need.” Perkins loans are relatively limited; undergraduate students can take out up to $5,500 per year (up to $27,500 total), while graduate students can borrow up to $8,000 per year. The total that a student can borrow between undergraduate and graduate loans is $60,000. Because Peace Corps student loan forgiveness only applies to this specific type of loan, it will not be helpful to anyone who has Stafford loans, PLUS loans, or private student loans. While Peace Corps volunteers can take advantage of generous student loan deferment programs, the interest on all private loans and unsubsidized federal student loans will continue to accrue through the deferral period.

Eligibility is Strictly Calculated

Second, when determining years of service for loan forgiveness programs, the entire calendar year must be spent in service to qualify. Training is excluded from this calculation. In a typical scenario, a Peace Corps volunteer spends three months in training before being moved to the field for a two-year commitment. Only the two years in actual service count towards student loan forgiveness — and they must be two full years (365 days per year). Partial years — even 364 days — will not count towards cancellation. A volunteer cannot get partial credit or a pro-rated cancellation if they do not serve a full year.

Consolidation Renders You Ineligible

Third, if you consolidate your Perkins loans with other student loans, you will no longer be eligible for loan cancellation through the Peace Corps program. This may be a particularly harsh surprise for someone who took advantage of the many consolidation offers available to recent college grads. If you plan to serve in the Peace Corps, avoid consolidating your student loans to take advantage of this program.

Public Service Student Loan Forgiveness Program

In addition to the Peace Corps student loan cancellation program, Peace Corps volunteers may be eligible to participate in the federal student loan forgiveness plan. This program requires borrowers to be employed in public service — including the Peace Corps. After participants make 120 qualifying federal student loan payments, their student loan debt will be forgiven.

As with the Peace Corps cancellation program, the Public Service Student Loan Forgiveness program has a catch: making 120 consecutive on-time monthly payments in full. Peace Corps volunteers are only given a small monthly stipend, not a regular salary. Unless their student loans are very low or their parents or another person can make the payments on their behalf, they will most likely not be able to participate in this program.

Joining the Peace Corps is an incredible opportunity for many recent college grads and others. However, the options for having student loans cancelled or forgiven through service in the Peace Corps may be limited by the requirements and restrictions placed on each separate program. Volunteers are eligible to have their federal student loans fully deferred for up to three years, which may give you the ability to take on the exciting challenge of serving in the Peace Corps.