Managing student loans during volunteer service

We often hear from people who say that they would love to do a year or semester of service with Lutheran Volunteer Corps (LVC), but feel like they have too many student loans that they have to repay. If that’s you, we have some good news! There are actually several options to affordably pay your student loans.Money_flying_sm

Service with LVC also provides you with valuable work experience to help you get a job after volunteering and/or makes you eligible for many generous graduate school scholarships. So, you are not throwing money away by opting to serve instead of getting a full-time job.

We want to particularly lift up income-driven repayment plans & the Public Service Loan Forgiveness Program (PSLFP) for those with federal direct student loan debt.

If you have private loans, you’ll need to talk with your lender about repayment options. If you have a co-signer on any loan, it’s also important to discuss any loan repayment plans with them.

Public Service Loan Forgiveness Program (PSLFP)

If you are considering non-profit or government work, you can have your loan balance forgiven after 120 monthly payments via the PSLFP on Federal Direct Loans. And, you can count payments made during your LVC term  toward this 120 month limit!

For the PSLFP, you need to:

  1. Have Federal Direct Loans
  2. Be on an Income-Driven Repayment Plan
  3.  Submit the  required paperwork for up to 11 monthly payments made during your LVC term*

Income-Driven Repayment

You can pay what you’re able to afford with income-driven repayment plans during your LVC term (and beyond). One of the advantages of an income-driven plan is that your federal direct loan balance is forgiven after 20/25 years, depending on the payment plan. And, as noted above, if you work in public service jobs, it can be reduced to 10 years via the PSLFP. 

To verify for your income during your LVC term, we will provide a letter outlining our program and your stipend amount, to provide in your application. Most Volunteers on an income-driven plan have a $0 payment during their LVC term. You should start this application a few months before your grace period ends.

Other Loan Repayment Options

Deferment or forbearance are also options for your student loan debt, usually based on “economic hardship.” If you’re planning on graduate school and may end up accumulating and/or consolidating more student loan debt, deferment or forbearance may be the better options for you during your LVC term, going to an income-driven plan after graduate school. Again, LVC will provide a letter for you to verify your income for an application for deferment or forbearance.

There are loan forgiveness programs specifically for teachers as well, with potential for 100% loan forgiveness after 5 years.

For more details, check out this one page doc, LVC Service & Student Loans.

*Up to 11 months if you are on an income-driven plan at the beginning of your LVC year. Payments made on an income-driven plan before the end of your loan’s grace period do not count toward the PSLFP 120 payments. Your LVC placement needs to complete the PSLFP paperwork (step #3 above).

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