Conservative Movement Employees Now Eligible for Student Loan Forgiveness Program

By Mitchell J. Smilowitz, CPA

In response to a recent U.S. Supreme Court decision, the Department of Education has overhauled the Public Service Loan Forgiveness Program (PSLF) to extend student loan forgiveness to full-time employees of religious not-for-profit organizations.

By cancelling student loans after ten years of “public service,” PSLF is designed to remove the burden of student debt on those working in the public interest. PSLF applies to the William D. Ford Federal Direct Loan Program (Direct Loan Program).

The U.S. Department of Education announced that they are implementing actions that will make it easier for borrowers to receive loan forgiveness. The most important of these changes is a waiver, which runs through October 31, 2022, that allows student borrowers to count payments from all federal loan programs or repayment plans toward the PSLF. Student loans from private lenders do not qualify. The dollar amount of the forgiven loan does not count as income for federal and most state tax purposes.

Borrowers will need to consolidate their loans into the Direct Loan Program and submit a PSLF form prior to October 31, 2022 in order to qualify for the waiver. The Department of Education recommends that borrowers use the PSLF Help Tool to walk through the application process.

To qualify for the PSLF, you must:

  • Work for a qualifying employer. As of July 1, 2021, according to the decision by the Supreme Court, this includes religious not-for-profit organizations such as synagogues, Jewish schools and camps, seminaries, etc.
  • Work full-time for the organization. Full-time generally means at least 35 hours per week. The Department of Education is considering reducing this to 30 hours per week.
  • Have federal student loans through the Direct Loan Program. The waiver gives borrowers who have loans through other federal programs until October 31, 2022 to consolidate these loans into the Direct Loan Program.
  • Have repaid your loans under a qualifying monthly payment plan while you were working full-time for a qualifying employer. These are generally “income based” plans rather than “standard” or “graduated” payment plans.
  • Have made 120 qualifying payments. A payment waiver was in effect during the pandemic (March 2020 through January 2022). Even if you did not make payments during this period, these months count toward the 120 qualifying payments.

Borrowers who serve as full-time volunteers in religious not-for-profit organizations and provide religious instruction, conduct worship service or fundraise to support religious activities as part of their official duties may also be eligible for PSLF.

Because you have to make 120 qualifying monthly payments, it will take at least ten years before you are eligible for PSLF. You must be working for a qualifying employer at the time you submit the application and at the time the remaining balance on your loan is forgiven.

The Department of Education recommends that those who think they are eligible for PSLF submit an application. The Department will use the application to let you know if your loan payments qualify for the PSLF. If you work for more than one employer during the 10-year repayment period, you will need to prove that each employer meets program guidelines.

The Public Service Loan Forgiveness Program can greatly reduce the federal student loan debt burden for many of those working within the Conservative Movement, but determining whether you qualify for the program and applying for it can be complex. The Department of Education website has a Fact Sheet that can help you determine if you are eligible and, if so, how to apply for student loan forgiveness.

November 2021