A couple of weeks ago, I posted the very exciting news that the Department of Education created a new certification form for the Public Service Loan Forgiveness Program (PSLF). This form will allow borrowers to certify that they are in eligible employment for the 10 years of public service that must be completed to get loan forgiveness under the program.
Again, here’s how the program works. If you make the right type of payments (IBR, ICR, or standard payments) on the right type of federal loan (Direct loans), you might be eligible for complete federal loan forgiveness of any remaining balance after 10 years of payments, provided you work full-time for either a government entity or a 501(c)(3) nonprofit organization.
What’s interesting is that if you look at the certification form, it includes the following text: “a borrower’s employment does not qualify [for PSLF] if the borrower’s job duties are related to religious instruction, worship services, or any form of proselytizing.” This effectively excludes from PSLF any clergy or employees of a religious organization that have any of the above job duties, even if that organization is a 501(c)(3) nonprofit organization.
This, of course, is a major problem for federal student loan borrowers who took on a lot of debt in order to go to theology school or to become ordained as a religious or spiritual leader. Naturally, these individuals tend to earn fairly low salaries in their respective fields, and many recent graduates probably expected that their work would qualify for PSLF, given that religious organizations and institutions tend to be registered as 501(c)(3)’s. Although the original legislation and accompanying regulations that created the PSLF program had a similarly-worded religious exemption for non-profit organizations that were not 501(c)(3), we assumed that work for any type of 501(c)(3) organization would qualify as eligible employment. The language in the new certification form calls this into question, and the government’s legal basis for this is unclear.
More on this to come, as this is all quite new.
