Ministers and other ministry workers are now eligible for student loan forgiveness through the Public Service Loan Forgiveness (PSLF) program as mentioned in our 2022 Tax Updates. This program which forgives federal student loans for public servants meeting specific requirements was instituted in 2007.
However, religious workers employed by churches have been specifically excluded until July 1, 2021, when the Department of Education responded to a Supreme Court ruling that now allows religious workers to participate in federal student aid programs.
Public Service Loan Forgiveness allows borrowers’ student loans to be forgiven after the borrower has worked for the government or a non-profit organization for 10 years.
The main eligibility requirements include:
- Be employed by a government agency or non-profit (including churches).
- Work full-time.
- Have federal Direct Loans. (Some types of federal loans can be consolidated into Direct Loans making them eligible for forgiveness.)
- Repay your loans under an income-driven repayment plan.
- Make 120 qualifying payments. (See annual information and waiver opportunity below.)
While you are working toward your 10-year (120 qualifying payments) requirement, you should submit a PSLF & TEPSLF Certification and Application annually. Information can be found at the Federal Student Aid website. See link below.
There is a limited time opportunity to receive credit for some payments to qualify for the loan forgiveness that previously were not eligible. Again, see the Federal Student Aid website.
Be aware that the PSLF program currently has application backlogs and low approval rates. However, given the potential savings, it is worth applying.
“New Supreme Court ruling allows religious workers to participate in federal student aide programs.”