Public Service Loan Forgiveness for Pastors

With some government programs, it feels like the Fed only care if you can correctly fill out their paperwork. I feel like I’m a fairly intelligent person, but this paperwork seems impossible. It’s written in insider terminology and is overly complicated trying to account for nearly every possible situation. Just think about when you file your taxes. When completing the IRS’s 1040, how many pages of questions do you have to fill out to answer one simple question: “How much money did you make last year?” That’s the government in a nutshell. They want to help…as long as you can navigate the red tape. In this way, working with the government is very humbling and frustrating.

The program in question is the student loan forgiveness program (i.e. Public Service Loan Forgiveness Program). In exchange for being employed in “Public Service” for 10-years, the Fed will pay off the balance of your student loans. For the first 14 years of this program, church work wasn’t considered serving the public. Starting in July 2021, employment with religious nonprofits now counts. Sounds like a great deal, right? The only problem, the paperwork makes it almost impossible to be approved. Currently only 6% of applications are approved…which is actually is 6x better than four years ago. The good news is that the Fed has been a little better to work with during the pandemic which should improve your odds.

How do you qualify? Besides having the ability to complete the paperwork…which is only two pages of questions and four pages of instructions, you have to meet the following:

• 120 Monthly Payments: You need to have made at least the minimum payment for 120 months…not consecutive.
• Eligible Employer: You need to be employed full-time (30+ hours/week) with the government (at any level) or a nonprofit.
• Direct Loans: You need to have Federal Direct or Stafford Loans…subsidized or unsubsidized.
• Income-Based Repayment: You need to be enrolled for one of the repayment plans that is based on your earnings.

Good luck!

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Useful Links

• Pastor’s Wallet’s Advice: https://pastorswallet.com/are-pastors-eligible-for-public-service-loan-forgiveness/
• Government’s Guidance: https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service
• Application: https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service/public-service-loan-forgiveness-application
• Dave Ramsey’s Advice: https://www.ramseysolutions.com/debt/public-service-loan-forgiveness
• Student Loan Forgiveness Stats: https://educationdata.org/student-loan-forgiveness-statistics