College students and graduates who have taken out student loans might worry that they won’t be able to keep up with repayment if they sign up for AmeriCorps, but good news: There are penalty-free options to postpone student loan payments while you serve.
Forbearance
Individuals who are serving in a term of service in an approved AmeriCorps position may be eligible to have the repayment of their qualified student loans temporarily postponed while they are serving. It is through an action called forbearance. While an individual’s loan is in forbearance, the member is not required to make payments. Interest may continue to accrue but if the member successfully completes the term of service and the loan is a qualified student loan, the National Service Trust will pay all or a portion of the interest that accrued during the service period.
If your loan is eligible for forbearance based upon your AmeriCorps service, you can request that your loan holder give you forbearance during your service period. (A “loan holder” is the entity that holds the loan promissory note and has the right to collect from the borrower). You can easily and quickly request forbearance on-line through My AmeriCorps. After you finish your term of service, you will be responsible for repaying your loan according to the terms of the loan.
Eligibility for Forbearance
Individuals in approved AmeriCorps positions are eligible for forbearance for most federally-guaranteed student loans. You should contact your loan holder to see if your loan qualifies for forbearance based upon your AmeriCorps service. If your loan holder tells you that your student loan does not qualify for forbearance based upon national service, ask them if your service qualifies you for some other type of forbearance or deferment.
Only the loan holder can determine your loan’s eligibility and approve your request for forbearance. CNCS cannot approve forbearance requests; it only verifies that you are serving in an approved national service position.
If your loan is in default, it may not be eligible for forbearance. However, if you have loans that had gone into default before you began your national service, you can try to negotiate an arrangement with the loan holder or collection agency to bring the loan out of default so forbearance can be granted.
How to Apply for Forbearance
After you have enrolled in an AmeriCorps project, go into your account in My AmeriCorps.
- In your Home Page, click on the “Create Forbearance” link to bring up the page where you can request forbearance.
- Follow the instructions. Select your current term of service and identify the company that holds your student loan.
- When you click on “submit,” a request will be sent electronically to your loan company. This request will verify your involvement in AmeriCorps and request that your qualified loans be put in forbearance during your service period.
Your loan holder will notify you when they have acted upon your request. You should contact your loan holder if you have not heard from them within four weeks of submitting your information online. You can also check the status of your forbearance request in your My AmeriCorps account.
If the loan company has not registered in My AmeriCorps, they will not be on the list of institutions in the system. Try searching for the institution using variations of their name. Some institutions have registered using their commonly known initials (e.g., SUNY, not State University of New York); others are registered under their full name (e.g., Massachusetts Institution of Technology, not MIT). Try the city where the institution is located. If you cannot find the correct institution at the correct location, you should click on the institution “Not Found” link and follow the directions.
Interest Payments
Individuals who have successfully completed a term of service in an AmeriCorps program are eligible to have the Trust pay up to 100% of the interest that accrued on their qualified student loan during their service. The portion that the Trust will pay is determined by the type of service (full or part-time) and the length of the service period. The Trust will only pay interest on qualified student loans, as described on the Using Your Segal AmeriCorps Education Award web page.
An interest payment can only be made after you have completed your service and have earned an award. The Trust cannot pay interest if you fail to complete your term of service. Exceptions will be made only if you fail to complete your term of service for compelling personal circumstances and you have earned a pro-rated award. It is up to your individual program to determine compelling personal circumstances. Examples that might be considered are a serious illness or injury, death of your immediate family member, or the early closing of your project.
Interest payments are made in addition to your education award; they are not deducted from your education award amount. Interest payments are based upon the interest that accrued only during the time you were serving in the AmeriCorps program.
Remember that interest payments, as well as payments made from your education award account, are considered by the IRS to be taxable income in the year in which the payment is made.
How to Apply for an Interest Payment
After you have completed your service and received notification of your award, you can go into your account in My AmeriCorps.
- In your home page, click on the “Create Interest Accrual” link at the top of the page to bring up the page to request the payment.
- Follow the instructions. Select the appropriate term of service and type of loan. Then, identify the holder of your student loan.
- When you click on “submit,” a notice will be sent electronically to your loan company. A record of your request will appear in your account home page.
This notice will verify that you served in an AmeriCorps program and earned an education award. It also requests that the loan holder provide information about your qualified loan so that the correct amount of interest can be determined. The loan company provides the information, then certifies and submits the payment request electronically to the National Service Trust.
It is a good practice to get the accrued interest paid before making a payment using your education award. This will give you a more accurate payoff amount if you want to pay off a student loan using your education award.
When the interest payment has been made, it will show up in your My AmeriCorps account. It should also show up in the statement that the loan company provides to you.
If your institution has not registered in My AmeriCorps, they will not be on the list of institutions in the system. Try searching for the institution using variations of their name. Try searching by location. If you are unsuccessful in your atempts to locate the institution, you should click on the institution “Not Found” link and follow the directions. These payment requests may need to be processed manually through paper forms and may take several weeks to complete.
The Importance of Using My AmeriCorps to Conduct Your AmeriCorps Business
In order to prevent a delay in the processing of interest payments, individuals should request payments electronically using the on-line system, My AmeriCorps. This is a secure, fast, and user-friendly method for requesting interest payments to be remitted to your loan holders. It also provides electronic records of payments both requested and paid, and there are no forms to mail in.
CNCS cannot guarantee the prompt processing of requests for interest payments using paper forms. Payments requested by paper can take up to six months or more for processing and are less secure.
It is fast and easy to access your National Service Participant account.To register, go to My AmeriCorps, click on “Register to create a new Member/Alum account”, and follow the instructions.
Editor’s Note: This page was published originally by the Corporation for National and Community Service.
