I often hear from overburdened student loan borrowers desperate to find ways to afford their monthly payments. While terms on a federal loan are somewhat flexible, private loans are nearly impossible to modify these days. What’s a borrower to do to come up with the extra money to address the sometimes six-figure student loan debt she’s carrying?
We’ve talked about getting that second or third job. But there’s also volunteering. Traditionally it pays nothing but organizations like SponsorChange.org and CharityForDebt.org aim to help borrowers lower their student loan debt by connecting them with paid volunteer opportunities.
There’s always the option of joining the Peace Corps, which makes volunteers eligible for deferment and partial cancellation of certain federal loans. AmeriCorps offers eligible volunteers stipends to be used towards student loan repayment.
But these relatively new groups don’t expect you spend months to years on a volunteer assignment. In fact the hope is that you will work and volunteer at the same time, all to increase your chances of making enough money to pay down your loans. One issue, though: The organizations have yet to expand nationally. CharityForDebt, which plans to officially launch in January, services the Washington, D.C. area. SponsorChange is based in Pittsburgh, PA. But the hope is to catch on in other cities.
In a conversation with CharityForDebt’s co-founder Jonathon Lunardi, he explains that the group – equal to wanting to help borrowers pay down debt – wants to provide a way for young adults to be charitable, something they often feel they have little time to do. And you can utilize your existing skills. ”You could use your legal degree and offer a few weeks of part-time consulting to a charity,” says Lunardi. A volunteer gig may pay you $10 to $15 an hour to be used directly for education expenses and loans. The wage is paid for by a sponsor who then gets to deduct his “donation” from his taxable income. It’s a win and win.
In a world where student loan debt has eclipsed credit card debt, volunteering your way to help pay down your loans is an innovative way to help a growing group of very needy borrowers.
College costs are climbing but before you take out a private student loan, there are a few things you need to be aware of. Read Credit.com’s report on Private Student Loans: What to Watch Out For before you apply for your next student loan.
Farnoosh Torabi Personal Finance Contributor, Farnoosh is a nationally recognized author, expert and television host. Her first book, You're So Money, is an acclaimed tell-all for young adults searching for financial independence. Her new book Psych Yourself Rich, gives readers the mindset and discipline to build their financial life. Have a question for our experts? Get the answer in the Credit.com Forum.
{ 4 comments… add a comment }
Where did you get this information, my daughter has been serving in the PC for two years in Africa. She was able to defer her student loan while it grows considerable insterest, We checked everywhere to find a way for partial cancellation and it does not exist unless she signs on to a govt job for 10 more years making payments. Please let us know specifically how this partial cancellation works or even intrest free deferment. She has served her country through volunteerism and received no break on her loans or interest,
This is the actual information PC provides. So whilst your information is correct, it is complicated and full of obstacles as well as very limited to a certian population.
Deferment of Student Loans
Volunteers may defer repayment of student loans under several federal programs, i.e., Stafford (formerly known as guaranteed student loans), Perkins, direct and consolidation loans. Some commercial loans may also be deferred during Peace Corps service. Because the rules that authorize deferment are complicated and subject to change, it is best to talk to a Peace Corps recruiter about how this benefit applies to your situation.
Cancellation of Student Loans
Only Volunteers with Perkins loans are eligible for a partial cancellation benefit. Fifteen percent of your Perkins loans can be cancelled upon the completion of each 365 days of service during your first two years of service, and 20 percent can be cancelled upon completion of each of the third and fourth years. Therefore, four full years of service would equal a 70 percent cancellation of your existing loan.
The article sounds good, giving hope in getting your way out of student loan debt, but it is lacking information! Procedures you mention above might be more complicated than they appear!
Face it. We are slaves to our student loans. We are part of the machine we created. I’m searching for a way to move to India and feed starving children, but I carry a monthly payment of $800. I will make a few bucks above minimum wage because my two degrees no longer have use because nobody hires someone without experience. My generation has entered a cycle of debt and possessions. Youtube videos- Tragedy and Hope The interest rates will keep us struggling and continually in debt.