Workers for Religious Nonprofits May Now Qualify for Student Loan Forgiveness for Their Religious Work

August 16, 2021

The content of this Alert was derived with permission (for which we are grateful) from an article published by ECFA. (www.ecfa.org)


Federal law provides an opportunity for qualifying former students with Direct federal student loan debt to have a portion of their student loan debt forgiven pursuant to the Public Service Loan Forgiveness (PSLF) program.  Former students must generally work for the federal government; a state, local, or tribal government; or a not-for-profit organization for a period of at least 10 years in order to qualify (certain other criteria also apply).  Historically, work for churches or other religious organizations did not qualify a former student for loan forgiveness under the program. However, under new regulations effective July 1, 2021, clergy and religious workers may now qualify.

According to attorney Adam Minsky writing for Forbes.com, the PSLF program was launched in 2007 as a way to help those working in public service with their student loan debt.  Under the program, an individual who meets the program qualifications including performing qualifying work for a qualifying employer may submit an application to have their student loans forgiven.

When the program was first initiated, religious work was not considered qualifying work and was specifically excluded from PSLF eligibility.  These new regulations, now in effect, have expanded PSLF eligibility to include time spent on religious instruction, worship services, or any form of proselytizing as part of the job responsibilities being counted toward meeting the full-time employment requirement.

To learn more and determine eligibility for Public Service Loan Forgiveness, visit the helpful tool at the Federal Student Aid website.

On a cautionary note, Minsky mentions in his article that the program struggles with application backlogs and low approval rates.  Also, there is no guarantee that the program will continue in the future.  The federal government could end or alter the program at any time.

The contents of this publication do not constitute legal, financial, accounting, tax, or any other type of professional advice. For professional advice regarding the subject matter addressed herein, the services of a competent professional should be obtained.