Public Service Loan Forgiveness Expanded Today for Clergy and Religious Leaders

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Clergy members and other student loan borrowers with religious activities may now be eligible for the Public Service Loan Forgiveness (PSLF) program after being expelled for more than ten years. The new rules, effective today, expand PSLF eligibility for workers in this new class.

Public service loan forgiveness allows federal student loan borrowers to pay off their education loans after serving in government or nonprofit positions for at least 10 years. The program requires 120 “qualifying payments” to be eligible for loan forgiveness. These payments must meet several criteria:

  • Payments must be made to Direct Federal Student Loan… Not all federal student loans are issued through the direct loan program.
  • Payments must be made in accordance with income-driven repayment plan such as IBR, PAYE, or PAY OUT… Payments made under the 10-year standard plan are also eligible, although the underlying federal loan will be fully repaid within 10 years.
  • The borrower must make timely payments while working as a full-time employee in either a government agency, organization, or non-profit 501 (c) (3).

Since the inception of the program in 2007, religiously oriented work, such as conducting worship or participating in religious instruction, has been specifically excluded from eligibility for PSLF even if the borrower was a full-time employee of a 501 (c) (3) nonprofit, for example like a church, synagogue or mosque. Under the leadership of former Education Secretary Betsy DeVos, the US Department of Education drafted new rules to address this exception, arguing that excluding religiously-oriented work from PSLF eligibility could violate the constitutional clause of the US Constitution. “Since current regulations discriminate against religious groups and deprive people of the opportunity to participate in important government programs based on their religious status, the current regulations are likely to be a significant burden on the religious practices of these organizations,” the Education Department wrote in Comments (1) accompanying final rules.

The new rules come into force on July 1, 2021. Ministry of Education updated my website to confirm that: “If you work for a non-profit organization, time spent in religious teaching, worship services, or any form of proselytism as part of your job responsibilities may count towards meeting full-time requirements. … “

While PSLF’s expansion to clerics and other religious leaders may be welcome news for some student loan borrowers, the program still faces challenges, including unfulfilled applications, low approval rates, as well as poor management by the student loan attendants… Student loan advocacy organizations and progressive legislators in Congress called on the Biden administration extend the current pause on most federal student loan payments that are due to expire on September 30, until issues with PSLF and other federal student loan programs are properly resolved. So far, the Department of Education has not functioned. The Biden administration recently announced the start of a lengthy rule-making process. review and possibly overhaul major federal student loan programs, including government service loan forgiveness. But any further meaningful change could happen over the years.

Further reading

New Federal Report: Student Loan Providers Frequently Harm Borrowers Seeking Public Service Loan Forgiveness

New data shows that most of those who apply for this student loan forgiveness program are denied

More than 500,000 people are eligible for student loan forgiveness, but no action has been taken by the government, the group says.

Biden Administration Announces Significant Renewal of Income Based Loan Repayment and Student Loan Forgiveness Programs

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