Do churches qualify for public service loan forgiveness?
Yes! pastors rejoice! After over a decade of exclusion, clergy and religious workers are now eligible for Public Service Loan Forgiveness (PSLF) When the program first started in 2007, religious work was not considered qualifying employment.
However on July 1st, 2021 this changed with new regulations created by the department of education which believe such an exclusion violated establishment clause rights under Article six-paragraph one-VDT “Establishment”.
Now there are no more religious restrictions so pastors can apply without worrying about losing federal student loan eligibility like before.
If you are a pastor, religious leader, or you plan to enter a religious institution in the future, be sure to familiarize yourself with these important facts about PSLF as there are some loan forgiveness for pastors. You can learn more about PSLF here.
WHAT IS PUBLIC SERVICE LOAN FORGIVENESS?
Student loans are a huge problem for Americans. In fact, it has been estimated that there is currently $1.5 trillion in student debt among all borrowers! As such an overwhelming amount of people depend on this form or repayment method to finance higher education and qualification towards future careers – one federal government initiative seeks not only to provide relief but also to give incentive through Public Service Loan Forgiveness (PSLF).
PSLF allows those who work full-time in qualifying public service jobs at any level to receive 100% loan forgiveness after 10 years if they have made 120 monthly payments under standard terms.
Not everyone is eligible for PSLF. Eligibility requires that 120 payments are made, the loans themselves are Direct government loans being paid on an income-driven repayment plan and you’ve worked directly with one of our qualified employers who meet these requirements.
120 MONTHLY PAYMENTS TO QUALIFY
First, to qualify for this program, your monthly payments must be made after October 1st 2017. Payments are only eligible if you make them while employed full-time by a qualifying employer and pay no more than 15 days after the due date. Normally any other instances in which ones weren’t required to (such as during school or under deferments) do not count towards PSLF qualification.
One thing to note: borrowers get credit for making payments during the government-mandated forbearance in response to the coronavirus pandemic even if they are not making payments. The last 17 months have been like a free pass where you can submit your PSLF form and save yourself some money
ONLY DIRECT LOANS
Second, It’s important to remember that not all student loans are eligible for PSLF. Only Direct Loans qualify. That means Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation loans. Keep in mind, with Direct Consolidation loans, the 120 payments start with the new consolidated loan, previous payments on the individual loans do not count.
Another important public service loan forgiveness detail: Direct PLUS loans are eligible means that students themselves are not the only ones eligible for PSLF. Parents who take out PLUS loans to put their children through college are also eligible for PSLF. PSLF eligibility is based on the borrower, meaning that it is the parent who must qualify in the case of Parent PLUS loans.
PUBLIC SERVICE LOAN FORGIVENESS REPAYMENT PLAN
Third, eligible repayment plans for the PSLF are the 10-Year Standard Repayment Plan and all of the income-driven repayment plans: Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR).
While the 10-Year Standard Repayment Plan qualifies, if you don’t end up switching to an income-driven repayment plan it will be pointless because your loan will be paid off in 10 years anyway. The Standard Repayment Plan for Direct Consolidation Loans does not qualify for the PSLF.
QUALIFY PUBLIC SERVICE EMPLOYER
Finally, It is your employer, and not your actual job, that qualifies you for PSLF. Any level of the government organization (federal, state, local, or tribal), Americorp, Peace Corp, tax-exempt nonprofit 501(c)(3) organizations, and non-tax-exempt nonprofits that provide certain qualifying public services are all eligible.
Most churches and parachurch organizations in the U.S. are 501(c)(3) organizations, making them qualifying employers. But good news this doesn’t only apply to pastors, your church janitor is just as eligible as you are because you both work for the right kind of employer. In addition, you must still be working for that qualifying employer when you submit the application and when the loan is actually forgiven.
WE CAN HELP
Getting your personal finances back on track can be overwhelming. That’s why We are here to help. We save clients thousands of dollars by helping them get rid of their student loan debt for pennies on the dollar. Because we specialize in student loans.
If you need help getting out from under your student loans or feel like your credit is doomed, call now to learn how we can help.