By Liz Weston
When P.K. Drago graduated from George Washington University in 2009 at the peak of the Great Recession with $40,000 in student loan debt, she decided to do volunteer work.
"It was not a good time" to get a job, the 26-year-old now says, and so she joined AmeriCorps, a volunteer organization that is essentially the domestic analog of the Peace Corps.
While working for AmeriCorps, she stocked shelves at a Los Angeles food bank, mucked out stalls at a therapeutic horse-riding camp near Sacramento and helped remediate mold in New Orleans.
She picked up experience that eventually helped her qualify for her current job as a paid, full-time volunteer coordinator for Habitat for Humanity in Washington, D.C.
And she earned an extra "bonus" benefit: AmeriCorps gave her about $10,000 in education awards that she could use to pay off her college loans.
For graduates and others saddled with student loan debt, AmeriCorps is one of many programs that offer grants, cancellation or forgiveness that can reduce the burden. Many are particularly helpful for graduates who work in low-paying fields or do volunteer work.
One such program, Income-Based Repayment (IBR), recently received a big publicity push from the U.S. Department of Education after complaints that too few borrowers knew about it and that applying was difficult.
Under IBR, approved by Congress in 2007, payments of federal student loans are capped at 15 percent of "discretionary income," defined as the amount over 150 percent of poverty levels for a borrower's household size.
In practice, payments are usually less than 10 percent of gross income, said Mark Kantrowitz of Edvisors Network. Any remaining balances are forgiven after 10 years of payments if a debtor has a public service job, or after 25 years otherwise.