Effective July 1, 2021, eligibility rules for the Public Service Loan Forgiveness (PSLF) Program have been changed. This change creates a new opportunity for clergy members and other employees of not-for-profit organizations engaged in faith-based work to potentially have certain student loans forgiven under the PSLF Program.
The PSLF Program is administered by the U.S. Department of Education and designed to support careers in public service. The PSLF Program forgives the remaining balance of an eligible individual’s student loans that were provided under the federal government’s Direct Loan Program (or consolidated into a Direct Loan) after the individual has made 120 qualifying monthly payments.
To be eligible for loan forgiveness, an individual must be working full-time for a qualifying employer and meet other eligibility requirements. Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code—such as local churches, annual conferences, church-controlled agencies and church-associated organizations—can be qualifying employers. In the past, applicable rules excluded applicants from counting hours spent on “religious instruction, worship, and any form of proselytizing” toward the full-time work requirement. The Department of Education has removed this exclusion effective July 1.
Getting approved for the PSLF program has not been easy for many in the past. Some temporary pandemic-era changes are in place that temporarily expands eligibility for the program. For example, changes to qualifying payments and an opportunity to consolidate into the Direct Loan Program are in place until October 31, 2022. Details are available on the Federal Student Aid website.
The PSLF Program’s eligibility requirements and application process are complex. Clergy members and lay employees who are interested in learning more about the PSLF Program and the recent change are encouraged to visit the Department of Education’s PSLF Program website.