After more than a decade of exclusion, church and religious student loans debtors may be eligible for the PSLF program or they may consolidate their debt through Payday Champion. PSLF eligibility for this new class of employees has been expanded by new rules that went into effect today.

After working for at least ten years in jobs with the government or nonprofit organizations, federal student loan borrowers are eligible for Public Service Loan Forgiveness. You must make 120 “qualifying payments to qualify for debt forgiveness.” These payments must fulfill some requirements:

• On a Direct federal student loan, payments must be paid. The Direct lending program does not cover all federal student loans.
• Income-driven repayment plans such as IBR, PAYE, or REPAYE must be used to make payments. Payments made under the 10-year Standard Plan are also eligible, albeit the underlying government loan would be repaid within ten years.
• While working full-time for a government agency or institution, or a 501(c)(3) nonprofit organization, the borrower must make on-time payments.

Even if the borrower was a full-time employee of a 501(c)(3) nonprofit organization such as a church, synagogue, or mosque, Religious employment like conducting worship services or teaching religion was explicitly barred from PSLF eligibility since the program’s inception in 2007. The US Department of Education prepared new rules to address this restriction under former Education Secretary Betsy DeVos, stating that removing religious-oriented activities from PSLF eligibility might violate the US Constitution’s Establishment Clause. 

Department of education wrote in comments

The Department of Education wrote in comments accompanying the final regulations, “Because present restrictions discriminate against religious organizations and deny people access to critical government initiatives, The existing rules undoubtedly impede their religious freedom.”

As of July 1, 2021, the new rules will be in effect. “If a not-for-profit organization employs you, time spent on religious teaching, worship services, or any kind of proselytizing as a part of your work obligations may be counted toward achieving the full-time employment requirement,” the Department of Education has amended its website.

While the addition of clergy and other religious professionals to PSLF may be good news to some student loan debtors, the program is plagued by application backlogs, low approval rates, and poor management by student loan servicers. Borrower advocacy groups and progressive members of Congress have encouraged the Biden administration to prolong the existing moratorium on most federal student loan payments, which is slated to expire on. 

September 30, until the PSLF and other federal student loan programs are resolved. The Department of Education has been silent. The Biden administration has started a lengthy rulemaking process to study and reform crucial federal student loan programs, including Public Service Loan Forgiveness. However, it might take years.

Waiver of the PSLF leads to loan forgiveness

Due to the COVID-19 national emergency, the US Department of Education announced on Oct. 6, 2021, a temporary adjustment to the Public Service Loan Forgiveness (PSLF) program rules. Throughout the pandemic, the ED has rewarded borrowers.

Borrowers may now get credit for payments that were previously ineligible for PSLF.

New QP regulations

It doesn’t matter whether the payment was made in whole or on time, the previous payback period qualifies under the new interim criteria. You must still be qualified.

Direct Loan borrowers who have already consolidated or will consolidate before October 31, 2022 are affected by this change.

Parent PLUS loan payback dates are not included in the restricted PSLF waiver. For additional information on how this may (or may not) effect you, see the sections below.

To be eligible for further rewards, you must meet certain criteria.

Full-time positions

During the month you were repaying your loan, you had to work full-time for an authorized employer. The PSLF Program offers credit for payments made after October 1, 2007. If you haven’t already, you must complete a Public Service Loan Forgiveness (PSLF) Certification and Application (PSLF form).

Consolidation of debt

By Oct. 31, 2022, all non-Direct Loan federal student loans (such FISLs and NDSLs) must be incorporated into the Direct Loan program.