Basic terms of the CONGREGATIONAL Pastoral Education Loan Repayment Program:
- Maximum loan amount: Up to amount of indebtedness (not to exceed $100,000).
- Loans will be written on an unsecured basis.
- Up to two-year draw period.
- Interest billed monthly during draw period.
- Converted to fully amortizing loan over remainder of loan term. (WHY? - Some borrowers may have significant "grace periods" of zero to low interest rate and repayment requirements.)
- Maximum 10 year repayment at LCEF's Cost of Funds plus 1% adjusted annually.
- The loan proceeds will be disbursed directly by LCEF to the creditors. (Draws requested subsequent to closing will be approved by the National Office and submitted to Loan Specialists for processing).
- Loan origination fee, $75, not to exceed the maximum amount permitted by law.
- Personal Budget Counseling attendance by pastor is required.
- Payments to be made by congregation.
- No prepayment penalty.
- Federal student loans are not eligible for this program. (WHY? - Federal Student Loans are NOT dischargeable by Bankruptcy courts. Additionally, Federal Student loans are eligible for Federally backed repayment levels and deferments at terms unavailable elsewhere.)
If the pastor accepts a call to a new congregation, the new calling congregation may refinance the loan and the borrowing congregation will be released from liability of the note. Pastor may apply to refinance in his name, subject to the Direct Pastoral Education Loan Repayment Program guidelines and applicable lending regulations.
The application form has a space for the congregation to submit the level of subsidy they intend to provide.
Congregations should be strongly encouraged to draft a promissory note or Memorandum of Understanding with the pastor, clearly identifying the repayment responsibilities.
I have attached a sheet that outlines the differences between the two loan options. Please click here to use this for your reference. Please understand this is not a silver bullet that will make the debt burdens go away. However, we are excited that this program provides LCEF with an opportunity to assist pastors and congregations in addressing this growing concern.
A letter will be going to all District Presidents announcing this program. You may be asked questions about it. If you or any one of your District teams has questions, please let me know.
Vice President, National Lending
Loans & Real Estate
10733 Sunset Office Drive, Suite 300 St. Louis, MO 63127-1020
Phone: 314.885.6500 or 800-854.4004, Ext 6500