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A basic description of the Clearance process can be viewed here: http://www.peacecorps.gov/index.cfm?shell=learn.howvol.stepstoapply.medandleg but
there are many variables.

Legal Clearance
The first step is a preliminary legal clearance. You will be asked to submit fingerprint cards and an authorization for a background check. This preliminary clearance is to check about your marital status, dependents, financial obligations, or other circumstances that could affect your eligibility. It is usually done prior to or shortly after your nomination. At this point you will receive a check mark in your toolkit and a statement that your initial legal review is complete and there are no legal holds on your account at this time. This does not mean legal clearance is complete.

The second phase of the legal clearance is a complete background check done by the FBI. This is not usually done until after you have received an invitation to serve in the Peace Corps.

A significant portion of the budget (I hear 40% or 30K$) for fielding a volunteer for two years is spent in paying the agency to investigate a candidate (the FBI loves the Peace Corps, free money).

Medical Clearance
There are actually three parts to the medical clearance process: a physical examination, an eye examination, and a dental examination.

Following your nomination you will be sent a "medical packet" with forms to be completed by your doctors. The contents of this packet will depend on how you answered the questions in your Health Status Review questionnaire that you filled out during the application process. The most basic packet consists of a 4 page form for medical, a form for dental, and a form for information from your eye exam. In addition, if you answered "yes" to any questions on your Health Status Review questionnaire, you will receive requests for additional information for those items.

Once your packet is completed you send it back to the Medical Office for review. You may be medically cleared at this point based on the information you submitted but it is also possible that they will request further information or more tests.

At some point they will decide they have enough information to make a determination about your medical status and they will then issue a medical clearance, a restricted medical clearance, a deferral of 3-36 months, or a medically not qualified status. A list of some medical conditions that may affect your clearance is available on their website.