On January 31, 2012, without warning or conversation, the Department of Education made clergy ineligible to participate in the Public Service Loan Forgiveness (PSLF) program. PSLF was meant to encourage Americans to pursue higher education and public service by guaranteeing that long-time employees of 501(c)(3) non-profit organizations would have their federal education loans forgiven after 10-years of public service employment.
Material issued by the Department of Education on January 31, 2012 introduced new language that now restricts participation in PSLF and effectively excludes clergy from participating in the program.
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The Public Service Loan Forgiveness (PSLF) Program was created in 2007 as part of the College Cost Reduction and Access Act. Neither the language of the law, nor any of the relevant statutes and regulations associated with it, exclude clergy from PSLF. The new material issued by the Department of Education in January 2012 unfairly introduces additional criteria that are not part of the law voted on by Congress. Congress could have chosen to exclude clergy, and such a restriction into the law, but it did not.
On October 23, 2008, the Department of Education issued final regulations regarding the Public Service Loan Forgiveness program. These regulations clarify that eligibility for PSLF requires full-time employment at a public service organization – meaning either a – non-profit organization under section 501(c)(3) of the IRS code OR private organization that is not engaged in, among other things, religious activities. The religious restriction applies ONLY to private organizations NOT to 501(c)(3) non-profits. According to these regulations, clergy who are employed full-time at a 501(c)(3) non-profit organization ARE eligible for PSLF.
Only in the most recent Fact Sheet and Employment Certification Form (issued by the DoE on January 31, 2012) changed these eligibility criteria and excluded clergy from PSLF. These materials clearly contradict the DoE’s own regulations.
Seminary students are eligible for, and routinely receive, Federal Stafford loans during their studies, and then, after ordination/graduation are eligible to consolidate their loans through the William D. Ford Federal Direct Loan Program. Furthermore, the US tax code makes no distinction between religious and non-religious non-profits, both are equally classified as 501(c)(3) tax-exempt organizations. By extending these benefits to seminarians and religious organizations, the Federal Government already recognizes the important public service clergy provide. It is unjust for the government to help seminarians in their education by providing Stafford loans and Direct Loan consolidation and then to exclude them from PSLF at a time when they are most at need and are engaged in performing important social services.
Clergy of all faiths (ministers, pastors, rabbis, imams and priests) provide an invaluable service to the public, often acting as first responders for the most vulnerable in our communities. At a time when local, state, and federal governmental agencies increasingly rely on religious institutions to provide much-needed social services, it is unjust to penalize public service professionals who choose to do this work in a faith-based setting.