Fed Loan Forgiveness for Public Service Employee Excludes Religious WorkersAs education costs continue to rise, many Americans find themselves in a great deal of student-loan debt upon receiving their degrees.

It is this dynamic that led to specific provisions in the College Cost Reduction and Access Act of 2007, a bill intended to help students grapple with the high cost of modern-day education. But as the government continues to clarify the details of its federal loan forgiveness program for public service workers, it seems there’s one cohort that the government won’t be helping — those engaged in “religious instruction, worship services, or any form of proselytizing.”

Before getting into the religious exemption, let’s explore the intended impact of the law, which President George W. Bush signed back Sept. 2007. Tucked within the pages of the act is a “Public Service Loan Forgiveness Program,” which was essentially created to assist those individuals who work in non-profit and community-assistance positions.

The notion governing the policy is that public service workers may not take in substantial salaries. And because they work to help the community, this law seeks to offset the cost of their education. The government explains the terms of the agreement:

Under this program, you may qualify for forgiveness of the remaining balance due on your eligible federal student loans after you have made 120 payments on those loans under certain repayment plans while employed full time by certain public service employers. Since you must make 120 monthly payments on your eligible federal student loans after October 1, 2007 before you qualify for the loan forgiveness, the first cancellations of loan balances will not be granted until October 2017.

So, the program is relatively simple. If a responsible individual makes his or her payments in a timely manner (and for at least a decade), he or she is entitled to forgiveness of federal student loans. At this point in the individual’s career, he or she has likely paid a substantial amount toward the sum owed and, in the government’s eyes, deserves to be “forgiven” accordingly.

Fed Loan Forgiveness for Public Service Employee Excludes Religious WorkersNow, let’s look at the professions covered under this regulation. The forgiveness applies to any individual working for a government organization (federal, state, local or tribal), or any non-profit worker who is employed at a 501(c)(3) organization (this includes colleges and universities). In the end, this encompasses virtually all community service workers, however there are a few exceptions.

The law does not cover labor unions or partisan political organizations. Considering that these groups are explicitly political, this exemption is self-explanatory. Additionally, under the list of viable careers covered by the loan law, a specific line explains the government’s stance on loan forgiveness for religious employees: “Your employment at a non-profit organization does not qualify if your job duties are related to religious instruction, worship services, or any form of proselytizing.”

Another line reads:

Generally, the type or nature of employment with the organization does not matter for PSLF purposes. However, if you work for a non-profit organization, your employment will not qualify for PSLF if your job duties are related to religious instruction, worship services, or any form of proselytizing.

Here’s a screen shot that showcases the regulations and exceptions:

Fed Loan Forgiveness for Public Service Employee Excludes Religious Workers

This means that faith leaders and other church and non-profit employees — individuals who are often the first to respond and assist members of local communities in need — are excluded.

The Huffington Post has more:

When the Department of Education released regulations in 2008 and 2009, it explained that employees of 501(c)(3) nonprofits were eligible for loan forgiveness but that workers at nonprofits or private organizations who ”engaged in religious activities” would not qualify. Many seminarians and financial consultants…interpreted this to mean employees of religious 501(c)(3) groups would still qualify. [...]

Daren Briscoe, a Department of Education spokesman, stated via email that the latest document “did not change existing Federal policy, but clarified that individuals working at religiously-affiliated non-profit organizations who perform at least 30 hours of non-religious activities are eligible for PSLF, and that, consistent with similar long-standing programs, the federal government does not subsidize explicitly religious activity.”

It seems some seminaries had assumed, though, that clergy would still be able to benefit from this public service program. To their surprise, this clearly isn’t the case.

“If you think of Protestant clergy, they come out with four years of college and three years of seminary,” proclaimed Rev. Emily C. Heath, the pastor at West Dover Congregational Church in Vermont. “Those can be some pretty high-debt six-figure loans. The majority of young pastors I know have loans,” he continued.

Considering the cost of education for religious leaders and the often meager pay they receive upon entering the “workforce,” this is one portion of the population that could truly benefit from the provision. Opponents of such a notion, though, would claim that churches already benefit profoundly from the 501(c)(3) tax-exempt status and that the government shouldn’t be subsidizing religions.

But on the flip side, if all faith leaders were included in the mix, the benefit would be applied across the board and would not, in practice, favor one religion over another. Plus, there is ample evidence that churches’ worth to local communities is profound. Consider a Christianity Today report from April 2011 that assess the value of a church:

Does a congregation’s tax-exempt status outweigh the economic value it adds to its community? The University of Pennsylvania’s Ram Cnaan has long been searching for a specific answer. In a 1997 study, he found that urban congregations provide, on average, $140,000 worth of services annually. In 2009, Cnaan (who describes himself as nonreligious) revised his estimate to $476,663.24. Now he’s about to release an even more detailed pilot study focusing on 12 historic Philadelphia congregations, including First Baptist Church, whose annual value to the local economy Cnaan’s team places conservatively at $6,090,032 (nearly ten times its annual budget).

Fed Loan Forgiveness for Public Service Employee Excludes Religious Workers

The value of a church (Image Credit: Christianity Today)

Some clergy members are working fervently against the regulation in hopes that they, too, can benefit from the government’s loan forgiveness policies. Considering the recent contraceptive mandate on church-affiliated organizations, this is yet another issue with the potential to gain greater attention during an election year.

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