AmeriCorps is a voluntary program that partners with different organizations to deliver public service to people in need. The volunteers assist veterans, repair houses after disasters, protect the environment, etc. When people join AmeriCorps, they access multiple benefits. Besides growing professionally and becoming a part of a vast network, AmeriCorps delivers financial benefits for educational purposes. After completing the service, the members receive an education award they can use as AmeriCorps Student Loan Forgiveness or cover educational expenses.
This guide focuses on the AmeriCorps benefits for student loan borrowers. Besides, we will discuss other forgiveness options available to AmeriCorps members.
AmeriCorps Student Loan Forgiveness
AmeriCorps allows individuals to use their service for achieving educational goals. The organization offers education awards to individuals who complete the service period. You can choose to use this award to pay for educational costs or utilize AmeriCorps Loan Forgiveness to repay the existing student loan. The benefits apply to qualifying loans and educational institutions. Till now, $4 billion was distributed to assist the individuals’ educational goals.
Only the individuals who complete the service within a year can be eligible for the award. The service should be for AmeriCorps NCCC, State and National, or VISTA. AmeriCorps VISTA members can also choose not to get an educational award and instead receive a cash-stipend.
The education award amount of AmeriCorps depends highly on the Pell Grant. It is the equivalent of the Pell Grant available for that year. As the amount of Pell Grant changes yearly, AmeriCorps’s education award amount also varies. The award is determined by the work hours and participation type, such as half-time or full-time. To give you some idea, imagine working part-time with a minimum of 900 hours. In this case, the award amount is around $3,000. The more you serve, the higher the award amount is.
Details of Using the Award for Educational Expenses
You can use the benefits of AmeriCorps student loans to repay the existing debt or afford the educational expenses. This section will focus on the educational expense coverage. Before you get excited about the education award, you need to consider the eligibility conditions for usage.
1. The School
First, keep in mind that you can only use the award for eligible schools. Eligible schools are higher education institutions and some educational programs approved by the GI Bill. The schools can be domestic or foreign, but they need to have Title IV status from the Education Department. Such schools usually include technical schools, universities, or post-secondary schools. If your school provides federal loans like direct or Perkins, it has the desired Title IV status.
If you intend to use the award for the Gi-Bill-approved program, you should still pay attention to Title IV status. Programs offered by Title IV schools are eligible for the benefit. However, if the school does not belong to this category, you can only use the reward under specific conditions. These conditions determine the eligibility, and they depend on the timing of the award and the veteran status.
- Education awards granted on or after December 23, 2011, can be used in a school without Title IV status only if the individual is a veteran.
- Education awards given on or after October 1, 2009, till December 22, 2011, can be utilized for schools without Title IV status regardless of the veteran status.
- If an education award is received before mentioned periods, it cannot be used for such schools in any case.
2. Expense Types
The applicants can use the education award only for qualified expenses. These expenses depend on which type of school you are studying. First, let’s consider Title IV schools. Such schools can determine the cost of attendance, including expenses such as tuition fees, equipment, supplies, books, transport, accommodation, etc. The school’s financial office will determine the total cost by following the Education Department’s instructions.
Keep in mind that the costs should be current. It means your expenses incurred prior to the service in AmeriCorps will not qualify for the education award. Please, check the official AmeriCorps website for a more detailed classification of the expenses.
Details of Using the Award for Repaying Student Loans
The education award of AmeriCorps can be called AmeriCorps Loan Forgiveness because it can be used to repay the existing loan. However, there also exist some eligibility requirements. First, only the federal loans, including Direct, Perkins, or Consolidation loans, qualify for this benefit. Besides, if the loan is distributed based on Title VII and VIII, it will qualify for forgiveness. The forgiveness is also applicable for the loans distributed by a state agency. Unfortunately, if you have other loan types, such as private loans, you cannot apply to this program even if it covered the education costs. Besides, if your loan defaults, you can still be eligible for using the education award to repay the student debt.
AmeriCorps Student Loan Forbearance
Individuals with approved AmeriCorps positions can enjoy forbearance status for their loans. Forbearance involves the suspension of debt collection temporarily during the individual’s service period. If you get forbearance status on your student loans, you do not need to make payments for the specified time.
However, loan interest payments can still accrue. The good news is that if the individual successfully finalizes the service period and has a qualifying student loan, he/she will get repayment for the interest, either partially or fully. The National Service Trust delivers this benefit.
If you want to take advantage of AmeriCorps student loan forbearance while serving in AmeriCorps, you can contact your loan holder. The loan holder is the entity responsible for debt collection. Besides, individuals can easily apply for this benefit through the “My AmeriCorps” platform. Remember that when your service period is completed, you need to continue repaying the debt as specified in the loan terms.
Like all financial assistance benefits, the AmeriCorps student loan forbearance is not accessible to everyone. There exist some eligibility requirements that you need to satisfy before applying for the debt suspension.
First, this benefit is only applicable to student loans guaranteed by the federal government. Borrowers can contact their loan holders and ensure their eligibility. In case your loan does not qualify for this benefit, you can ask the loan holder about other possible forbearance or deferment options.
Keep in mind that only the loan holder can check the eligibility and approve the request. Some people might think that the CNCS can deal with the forbearance request. However, they are only responsible for verifying borrower’s qualifying service in national service. It is the loan holder who makes the final decision.
Additionally, borrowers should have a good standing for their loans. If your loan has student loan default status, you may not qualify for an AmeriCorps student loan forbearance opportunity. Instead, you can discuss your options with the loan servicer to determine how you can get rid of the default status.
Applying for forbearance benefits is fairly simple with the online tools of AmeriCorps. First, you need to sign in to your “My AmeriCorps” account. Then choose “Create Forbearance,” which will be visible immediately on the home page. In this section, you will find the instructions; make sure you read them carefully and follow. You will be required to input information like your service term and the loan holder.
Once the borrower clicks the “Submit” button, the request will directly be transferred to the loan servicing company. The company will check eligibility, and if the application is successful, they will put the loan into forbearance. As mentioned, the applicants get forbearance for a temporary period covering the service term of the borrower.
Usually, the loan holder notifies the borrower about the decision. If the borrower does not get notified about the result during the four weeks, he/she can contact the loan holder. Besides, it is possible to check the request status for AmeriCorps student loan forbearance in the “My AmeriCorps” account.
More about Interest Accumulated
As mentioned before, during the forbearance period, the interest continues to accumulate. However, it is possible to get rid of these accumulated payments. Borrowers who complete the service period can be eligible for interest repayment of up to 100%. The National Service Trust covers these payments that are accrued during the forbearance period.
The repayment can be partial or full. The Trust determines the percentage of repayment. The officials consider factors like the type of the service- full-time or half-time and the total period the borrower served.
Keep in mind that you will access this benefit only after the service period ends and qualify for the award. In case you do not complete the service, you will lose your eligibility for the benefit. However, there can be exceptions if the borrower does not complete the service because of valid personal reasons. These reasons can be a disease, death of a close one, closure of the project. Yet, the program officials determine the valid reasons. Hence, the reasons can be different in your case.
Additionally, the interest repayment is different from the educational awards. Therefore, if you receive an educational award, the interest repayment will not be deducted from the amount.
Application for Interest Repayment
The AmeriCorps Student Loan Forgiveness for interest payments is easy to apply with the “My AmeriCorps” platform. Similar to forbearance, you should again sign in to your account. On the home page, you will find the “Create Interest Accrual” button.
Once you click, read, and follow the instructions. This section will ask about the service term, loan type, and loan holder. When you submit the information, click the “Submit” button. As a result, your request will again be sent directly to the loan company.
The request will verify your service and request the loan holder to provide information about the total amount of interest accrued during the loan forbearance period. The loan holder will first verify and submit the information and then send the payment request to the Trust.
Once the interest repayment is finished, you will find the related notice in your account. Besides, the loan holder will provide a statement to the borrower verifying the payoff.
If you cannot find the loan holder’s name while applying, you can try to use the institution’s different names. If the name is still not visible, you can click the “Not Found” link. Next, follow the provided instructions. Such payment requests will require manual paperwork if the loan holder is not on the list. Hence, the repayment can take a few weeks to complete.
If you want to benefit from the education award, it is advisable to get the AmeriCorps Student Loan Forgiveness for interest payments beforehand. In this way, the borrower will know about the exact payoff amount before applying for the education award to pay out the debt.
Additionally, when you apply for benefits, use the “My AmeriCorps” online system. This platform allows borrowers to fill and send the applications fast. Besides, borrowers can receive the transactions’ records, such as the number of payments paid and requested.
Keep in mind that the CNCS is not as fast as the online system. It cannot ensure the fast processing of paper-based applications. Hence, it can even take six months to process the request.
Another benefit of serving in AmeriCorps is the cash stipends. This benefit is only accessible to AmeriCorps VISTA participants. They can decide not to use their education award received after the service period and receive cash-stipends.
Individuals who choose this option can even be eligible for a maximum of 15% AmeriCorps Student Loan Forgiveness. For more information, it is advisable to contact the Federal Student Aid Center.
Extending the Reward’s Use Period
It is possible to extend the use period of AmeriCorps Student Loan Forgiveness or other benefits. However, there exist some conditions. First, the individual needs to serve another term than the previous one. Alternatively, if the individual dealt with some challenges that restricted him/her from using the award in the original period, he/she can extend the period.
The latter cause can happen if the individual was ill, a close person died, a natural disaster happened, etc. Besides, you will become eligible in case you agree to serve another term that falls within the use period of the award. Lastly, military service or service in the Peace Corps can make the applicant eligible for the extension.
Notice and Request
Usually, when the successful individuals do not use their awards 6-12 months prior to expiration, the Trust sends an email to remind them about the award. Applicants who do not have a “My AmeriCorps” account will receive this notice via email.
In case you want to extend the use period of education awards such as AmeriCorps Student Loan Forgiveness, you need to submit a request again by using your online account. In this way, the application is processed fast. You will find documents indicating the subsequent service and extension request in the system.
Applicants need to sign into their “My AmeriCorps” account and click “My Education Award.” Next, they should choose an extension request and follow the instructions. Applicants will be required to choose their service term, request reasons, and upload documents. Finally, click the “Submit” button for your application.
Although the “My AmeriCorps” platform is the fastest way of application, not all individuals have accounts. Such applicants can send a written request to justify the reason for the request and provide information about qualifications. The requests can be sent via mail or fax to the National Service Trust.
The Downside of AmeriCorps Benefits
Whether you utilize the award for AmeriCorps Student Loan Forgiveness to cover expenses or pay interest, your benefit will be taxable. In other words, you need to pay additional taxes for the benefit received for that year.
In case an applicant uses the whole education award in one year, he/she includes the whole amount to the tax reports for that year. However, if a portion of the award is used, then that portion should be included in the tax reports.
Other Forgiveness Opportunities
Government helps student loan borrowers to reduce or eliminate their debt obligations. AmeriCorps volunteers also qualify for some programs.
1. Perkins Loan Teacher Cancellation
Perkins Loan Cancellation can forgive up to 100% of the Perkins loan. Some people think that this program is only available to teachers. However, many other positions like firefighters and AmeriCorps VISTA and Peace Corps volunteers can qualify for this program.
Such borrowers can access a maximum of 70% benefit in return for a four-year service. In the first and second service year, the AmeriCorps Student Loan Forgiveness will be 15%. For the subsequent years, the forgiveness will increase to 20%. Application for cancellation must be made to the school or the loan servicer.
2. Public Service Loan Forgiveness
Public Service Loan Forgiveness discharges the remaining student debt once the borrower makes 120 qualifying payments. However, the borrower should work in a qualifying public organization for the 120 payment period in return. AmeriCorps also qualify for this criteria.
There are some considerations for borrowers in need of this AmeriCorps Student Loan Forgiveness program. Many borrowers want to take advantage of forbearance when they serve in AmeriCorps. If you get a forbearance, you need to make sure that you use the education award to make a lump-sum amount. It means, when you get an award after the service is completed, you need to send money to the loan servicer.
Remember that you should inform the loan servicer that it should apply the funds as a lump-sum payment. For example, if you serve for 12 months and your monthly payment is $200, you need to pay $2,400 once the service is done. In this case, you will make 12 payments toward 120 payment requirements.
You can also check other federal forgiveness opportunities.
This section will answer frequently asked questions about AmeriCorps Student Loan Forgiveness and other benefits.
1. What if I Cannot Find My Loan Holder during the Application for Forbearance?
When you submit a request for forbearance, you will be required to choose your loan holder from the given list. It is possible that when you input the name of the loan holder, you will find no results. In this case, try to change the name based on different variations of the company. For example, some companies use abbreviations such as SUNY instead of the State University of New York. Besides, you can filter the results based on the cities and try to find your loan holder in the list.
If you cannot find the loan holder, you can click on the “Not Found” link. Next, read and follow the directions specified.
2. Can I Transfer My Education Award?
Yes, individuals who complete service and become eligible for an education award can transfer their benefits. However, only the successful individuals aged 55 or more when starting the service can transfer the reward to their children, step-, grand-, or foster children.
3. What Kind of Documentation will be Required for Extension of Use Period of AmeriCorps Award?
The documentation depends on your reason for requesting the extension. As mentioned, valid reasons can be illness, military service, Peace Corps service, a natural disaster, etc.
If you want to prove illness, you need to submit a certification from a medical practitioner. The document should indicate the problem and explain why it restricted you from using the award. In the case of military service, the enlistment form or DD-214 and the explanation mentioned for illness will be required.
Next, for Peace Corps service, a service description with a sign from the director is necessary. Lastly, a claim from insurance or a report from the fire department can be helpful in case of a natural disaster.
4. How Many Terms Can I Serve for AmeriCorps?
Depending on your program, there exist a maximum amount of education awards received, and terms served. For example, for AmeriCorps NCCC, there is no limit for service terms, but there should be a 10-month break, while for AmeriCorps State and National, you can only serve for four terms. When it comes to AmeriCorps VISTA, five years of service is the maximum.
Although it is possible to serve for a long period, you cannot receive more benefits than the sum of two-term full-time education awards.
5. Can I get Cash-Stipend if I Received the Maximum Limit of the Award?
If you have already received the maximum award amount, which is a total of two-term full-time service awards, you can still work for AmeriCorps VISTA in return for receiving cash stipends. There is a limit to five-year service for VISTA. If you have not exhausted your option, you can serve in VISTA and get cash-stipends.
6. What should I Do If My Loan Defaults?
Some benefits of AmeriCorps do not apply to defaulted loans. In such a case, it is advisable to think about getting out of default in the first place. There exist some strategies for this purpose. First, you can apply for loan rehabilitation. Rehabilitation requires making nine consecutive payments in 10 months. Direct and FFEL loans qualify for this option.
Another solution is student loan consolidation. When consolidating to a new loan, the default status is eliminated. However, the borrower should make three consecutive payments before consolidating the loan.
7. Is Interest Repayment Taxable?
We understand that taxability can benefit undesirable because many people do not have enough funds to afford taxes. Unfortunately, the interest repayment and an educational award of the AmeriCorps are taxable under the Internal Revenue Service Code. If you want this benefit, you need to also consider this AmeriCorps student loan forgiveness benefit.