The Public Service Loan Forgiveness program (PSLF) was just expanded to include clergy members and ... [+]
Members of the clergy and other student loan borrowers engaged in religious-oriented work may now qualify for the Public Service Loan Forgiveness (PSLF) program after being excluded for over a decade. New regulations that went into effect today expand PSLF eligibility to this new class workers.
Public Service Loan Forgiveness allows federal student loan borrowers to discharge their student loans after working in positions with government or nonprofit organizations for at least 10 years. The program requires 120 “qualifying payments” to attain eligibility for loan forgiveness. These payments must meet several criteria:
- Payments must be made on a Direct federal student loan. Not all federal student loans are issued under the Direct lending program.
- Payments must be made under an income-driven repayment plan such as IBR, PAYE, or REPAYE. Payments made under the 10-year Standard plan also qualify, although this would repay the underlying federal loan in full within 10 years.
- The borrower must make on-time payments while working as a full-time employee for either a government agency or entity, or a 501(c)(3) nonprofit organization.
Since the program’s inception in 2007, religious-oriented work such as leading worship services or engaging in religious instruction was specifically excluded from PSLF eligibility, even where the borrower was a full-time employee of a 501(c)(3) nonprofit organization such as a church, synagogue, or mosque. Under former Education Secretary Betsy DeVos, the U.S. Department of Education drafted new regulations to address this exclusion, arguing that excluding religious-oriented work from PSLF eligibility could violate the Establishment Clause of the U.S. Constitution. “Because the current regulations discriminate against religious groups and deny individuals the ability to participate in important government programs on the basis of their religious status, the current regulations likely amount to a substantial burden on those entities' exercise of religion,” wrote the Department of Education in comments accompanying the final regulations.
The new regulations are effective and in force as of July 1, 2021. The Department of Education has updated its website to confirm that, “If you are employed by a not-for-profit organization, time spent on religious instruction, worship services, or any form of proselytizing as a part of your job responsibilities may be counted toward meeting the full-time employment requirement.”
While the expansion of PSLF for clergy members and other religious workers may come as welcome news to some student loan borrowers, the program continues to be mired in problems including application backlogs, low approval rates, and poor management by student loan servicers. Student loan borrower advocacy organizations and progressive lawmakers in Congress have urged the Biden administration to extend the current pause on most federal student loan payments, currently set to expire on September 30, until the problems with PSLF and other federal student loan programs are properly addressed. So far, the Department of Education has not acted. The Biden administration recently announced the beginning of a lengthy rule-making process to review and potentially overhaul major federal student loan programs, including Public Service Loan Forgiveness. But any further meaningful changes could be years away.
Further Reading
New Data Shows Most Who Apply To This Student Loan Forgiveness Program Are Denied
Over 500,000 Are Eligible For Student Loan Forgiveness But The Government Hasn’t Acted, Group Says
