If you have federal student loans, you might be eligible to get all or part of the interest that accumulates during your service term paid for you.
Forbearance means that you neither make payments nor pay interest on your loan(s) over a specified period. In other words, you will not have to make payments on your loan(s) while you serve. Then after you successfully complete service, the National Service Trust will pay the interest that gathered while you were a member.
Loans do not go into forbearance automatically. There is a forbearance process to follow, the earlier in your term, the better.
Forbearance applies to most federal loans with two exceptions.
Private loans do not qualify for forbearance.
If you put your loans into forbearance and want to count your service term toward the 10-year Public Service Loan Forgiveness program, there are specific steps to follow.
Is forbearance available for members serving in a term without an education award? Yes! Members who have received the value of two full-time education awards are eligible for forbearance during their service terms and to have their accrued interest paid after successfully completing their service.
Here is a legal disclaimer from CNCS: "The National Service Trust can certify your AmeriCorps or VISTA status, but only the loan holder can determine your eligibility for forbearance. Contact your loan holder if you haven't heard from them within four weeks of submitting your information to the Trust."
If you have loans you cannot place in forbearance, investigate the Income-Based Repayment program or loan consolidation (to create new loans that qualify for forbearance).
The interest that CNCS pays on your student loan is taxable income. The amount in taxes is substantially less than the amount of the interest CNCS pays for you, but you are required to pay it.
If you are a VISTA not electing to receive the education award, you are not eligible for national service forbearance. You may have other options to make repayment easier during your term of service, such as Income Based Repayment (IBR). Other possibilities include Income Sensitive Repayment (ISR) and Income Contingent Repayment (ICR).
CNCS will NOT pay interest on loans if you fail to complete your term of service. Exceptions will be made only for compelling personal reasons. It's up to your individual program to determine those circumstances.