Prior to July 2021, most pastors did not qualify for the U.S. Public Service Loan Forgiveness program. Formerly, pastors could not count the hours they spent in "religious instruction, worship services, or any form of proselytizing" toward their full-time work requirement (at least 30 hours/week).
This restriction was removed in July of 2021, making more pastors qualified for the PSLF program. According to the Federal Student Aid website:
"For PSLF, you’re generally considered to work full-time if you meet your employer’s definition of full-time or work at least 30 hours per week, whichever is greater. If you are employed in more than one qualifying part-time job at the same time, you will be considered full-time if you work a combined average of at least 30 hours per week with your employers. If you are employed by a not-for-profit organization, time spent on religious instruction, worship services, or any form of proselytizing as a part of your job responsibilities may be counted toward meeting the full-time employment requirement." [emphasis added]
In October 2021, the U.S. Department of Education also announced a limited time waiver (through October 31, 2022) where participants in the PSLF program may count loan payments they made made before entering the PSLF program toward the 120 loan payments required for forgiveness.
On August 24, 2022, the U.S. Department of Education announced changes in the PSLF program to allow "more payments to qualify for PSLF including partial, lump sum, and late payments, and allowing certain kinds of deferments and forbearances – such as those for Peace Corps and AmeriCorps service, National Guard duty, and military service – to count toward PSLF." They are also creating a new income-driven repayment plan for federal direct loans which should reduce monthly payments for lower and middle income borrowers. Key items to note regarding the new repayment plan are:
- Payment calculations under this plan will raise the amount of income that is considered nondiscretionary income, essentially lowering the amount of income considered to be discretionary income.
- The payment amounts will be reduced from 10% to 5% of discretionary income.
- Loan balances will be forgiven after 10 years of payments (reduced from 20 years) for borrowers with original loan balances of $12,000 or less.
- Loan balances will not grow (due to unpaid interest) as long as required monthly payments are made.
For more details about this student loan forgiveness program and the limited time waiver go to https://studentaid.gov/manage-loans/forgiveness-cancellation.
You may also watch a free webinar called Savvy Student Loan Management, produced by the ABHMS, which gives a great introduction to utilizing the PSLF program.
Click here for more resources on repaying student loans.