Are Student Loans Forgiven for the Peace Corps or Disability?

BY Paul Solman  July 9, 2012 at 3:57 PM EST

Peace Corps Volunteer
Peace Corp volunteer Scott Wilhelm, right, worked as an agroforestry volunteer in El Salvador, assisting local farmers in growing fruit trees after a volcanic eruption destroyed their crops. Photo by the Peace Corps via a U.S. Government Work license.

Paul Solman answers questions from the NewsHour audience on business and economic news here on his Making Sen$e page. Here is Monday’s query:

Name: Dan

Question: Can student debt be forgiven for a two-year Peace Corps tour? Alternatively, if one does default on his student debt, can the government dip into Social Security Disability Income?

Paul Solman: According to the Peace Corps website:

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 also may 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.

Second, disability. From what I’ve been able to read, government student loans aren’t automatically discharged if a person is on SSDI. The Department of Education seems to have more stringent disability standards than Social Security. But if you mean, ‘Can the government garnish your SSDI check?’ — reroute the money to pay back the loan before it ever gets to you — the answer appears to be “no.” Readers who know more about this than I do are urged to correct or amplify.

This entry is cross-posted on the Rundown- NewsHour’s blog of news and insight.