July 13, 2024

Peace Corps Volunteers Fall Through the Cracks of a Student Loan Fix

It’s not clear when, exactly, the Peace Corps started to inform volunteers about the program. By 2014, the Peace Corps had documents about it on its site, but many volunteers of that era said they had never seen them or had simply followed the cues about deferment that were still coming up during orientation.

The problem was compounded by one of the P.S.L.F. program’s endemic dysfunctions: unhelpful loan servicers. With just one exception among my interviewees, former volunteers of that period said their servicers’ near-automatic advice had also been to defer payments. Clearly, the messaging about forgiveness and the Peace Corps was muddled from the start, though the 2007 P.S.L.F. legislation specifically included volunteers as eligible borrowers.

The law also includes a convoluted passage that allows volunteers to hand over all or part of the lump-sum award they get at the end of their service in exchange for a maximum of 12 months of credited payments. Few volunteers ever found out about this option, either, although it’s doubtful many would have tried it; those I talked to almost immediately put the lump-sum award toward basic expenses, like a place to live.

“I remember buying a van,” said Ms. Rico, who served in Albania. “Not because I needed a big van but because it was my homeless backup plan.”

Another former Peace Corps volunteer who also worked at its headquarters, Katie McSheffrey, thinks the Education Department eventually figured out that the volunteers could take Mr. Alvarez’s approach with the income-driven repayment plan, but failed to communicate the message.

If the fixes announced last month had applied to her, Ms. McSheffrey’s loan debt would have been wiped away immediately. Although she was thrilled for the military personnel whose deferred loans were covered by the changes, she said it was frustrating to be left out.

“I’m assuming they waived things for the military because they were not given adequate information,” she said. “Well, Peace Corps members weren’t, either.”

Article source: https://www.nytimes.com/2021/11/13/your-money/public-service-loan-forgiveness-peace-corps.html

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