When the Department of Education announced corrections to its deeply dysfunctional public service lending program last month, hundreds of thousands of long-suffering borrowers suddenly got a chance at the kind of relief the federal government had long promised them.
But one small, well-deserved group has been left out, even though its volunteers have gone through a particularly venerable government service: the Peace Corps.
Many Peace Corps alumni say that they – like others now receiving aid, including members of the armed forces – have received bad advice that undermines their attempts to scrap their loans. But the federal government did not see fit to solve its particular problem.
“We support the war in this country, but not peace,” said Bonnie Rico, a former volunteer who said she had received bad information from both her loan service provider and Peace Corps staff.
The PSLF program is a program that well-meaning lawmakers, regulators, and bureaucrats have botched badly since it went into effect in 2007, and government jobs after making 120 on-time payments.
However, the original program excluded people from certain types of loans or payment plans. And due to years of poor communication and customer service, many found out too late that they belonged to those excluded groups. The payments they made – in many cases for years – didn’t count.
In order to deliver on what the Department of Education itself recognizes as the “largely unfulfilled” promise of the program, officials decided that many of these borrowers could now get credit for their payments. Officials also said they would count the months of service for members of the military who have deferred, i.e. not made, payments while on active duty.
But the changes ignore the Peace Corps graduates, who also deferred payments, though many did so on the advice of Peace Corps administrators or their student loan service providers.
“I didn’t really have much parenting or family guidance to manage my loans,” said Michelle Swanston, a first-generation college student who spent two years in the AmeriCorps and a little over two years in the Peace Corps. “So I just listened to the advice of the organizations I wanted to visit.”
Ms. Swanston and Ms. Rico are members of a Facebook group of people trying to help each other navigate the PSLF. If necessary, they have also started asking the Ministry of Education and others for clarification or changes.
“We decided to give headaches to anyone in power who listens,” said another member, Corina Niner, who, like Ms. Swanston, was so dedicated to the peace corps mission that she worked at its headquarters.
I asked the Department of Education if there was a reason why Peace Corps volunteers were not getting the same attention as members of the military. I didn’t get a straight answer. However, a spokesman for the Ministry of Education said the newly improved PSLF was still being discussed as the ministry enacted further rules. A Peace Corps spokeswoman said the organization would continue to work with the department and hope to achieve a “favorable outcome” for as many volunteers as possible.
To the volunteers I spoke to, deferring payments made some sense. After all, the Peace Corps participants only earn a small scholarship, so it was appealing not to pay a monthly bill. But there was a way to do essentially the same thing and still have their time in the program recognized – often 27 months or more if they went to a second country.
Volunteers could have participated in an income-based repayment program and, if everything worked as it should, their payments could have been deferred to something they could afford. With just her meager Peace Corps scholarship, her payments would most likely have dropped to zero.
What people found out for themselves in the years after the 2007 legislation? I only found one: Arturo Alvarez, an attorney who passed the California bar exam after working part-time in a tax office for a few years while studying law. He then began his service with the Mozambique Peace Corps in 2016, saying the vast majority of colleagues he met had deferred their loans, which meant they would not count towards each month they were in the Peace Corps.
How did so many people take the wrong step? Bad information that has lingered over the years.
2010 Peace Corps Documents – Three Years After the PSLF. Program became law – refer to the deferral as the “reward” and “benefit” of volunteering for service. Some volunteers from the first half of this decade say the staff supported their rescheduling requests even during the orientation meetings. The bottom line is that, according to everyone I interviewed, PSLF was never mentioned during the first few years of the forgiveness program.
It is not clear when exactly the Peace Corps began to inform volunteers about the program. The Peace Corps had documents about it on its website until 2014, but many volunteers at the time said they had never seen them or simply followed the postponement advice that came up during the orientation.
The problem was made worse by one of the endemic dysfunction of the PSLF program: unhelpful loan service providers. With only one exception among my interviewees, former volunteers of the time stated that the almost automatic advice from their servicers was also to defer payments. Obviously, the messages of forgiveness and the Peace Corps were mixed up from the start, even though the 2007 PSLF legislation specifically included volunteers as eligible borrowers.
The law also contains a twisted passage that allows volunteers to hand over the lump sum payment they receive at the end of their service, in whole or in part, against offset payments of a maximum of 12 months. Again, few volunteers have ever heard of this option, although it is doubtful that many would have tried it; Those I spoke to used the lump sum almost immediately on basic expenses, such as an apartment.
“I remember buying a van,” said Ms. Rico, who served in Albania. “Not because I needed a big van, but because it was my plan for the homeless.”
Katie McSheffrey, another former Peace Corps volunteer who also worked at headquarters, believes the Department of Education eventually found that the volunteers could adopt Mr. Alvarez’s approach to the income-based repayment plan but did not communicate the message.
If the corrections announced last month had applied to her, Ms. McSheffrey’s loan debt would have been wiped away immediately. Although she was pleased to see the military personnel whose deferred loans were covered by the changes, she said it was frustrating to be left out.
“I assume that they passed things up for the military because they weren’t given enough information,” she said. “Well, neither were the members of the Peace Corps.”
Fortunately, it is still possible that the Department of Education could address the problem. However, it could be until 2023 for a new rule to take effect and it is not clear whether changes would be made retrospectively.
As with any student loan problem, it’s always tempting to blame borrowers: They should have done more research and asked more questions. But as I and others have reported over the years, they asked questions and often got wrong answers.
The Peace Corps carefully bridges the line between blame and remorse. “Ultimate responsibility for student loan payments or status changes rests with the borrower,” the organization’s acting director Carol Spahn wrote last month in an email to Sarah Kilchevskyi, who helps lead a group of former volunteers seeking loans for their service. “If any information provided to you by the Peace Corps was inaccurate or incomplete, I sincerely apologize.”
Major corrections in public order often leave out deserved people. But the Peace Corps volunteers who simply did what they were told in the service of their country should be given more than one excuse starting with an “if”.