Hi Heather,

Thank you for the helpful site. A colleague of mine who is an enthusiast of yours directed me here.

I have a question: I am an ordained pastor of a church that is part of a mainline church (United Church of Christ, or UCC). The church I serve has its own individual tax ID, but we are considered 501(c)3 tax-exempt as part of the group exemption granted to all UCC churches through national affiliation. As a pastor of a local church with a group tax exemption, am I eligible for public service loan forgiveness?

Many thanks in advance for your answer.

Blessings,
Matt

Matt,

My opinion is that the statute and regulations clearly state that all full time paid work for a 501(c)(3) nonprofit is qualifying public service employment, including work as a pastor.  Churches have 501(c)(3) status by operation of law.  However, I am not in charge of implementing PSLF, and I must caution you that some time ago I became aware that there was some internal debate among Dept of Education staff members regarding this interpretation.  I think the church community needs to think strategically about how to seek clarity from the Department of Ed.  Right now, I’m not able to organize this effort myself but I’d be glad to speak to you or others about my ideas for what should be done. 

Yours,
Heather

Hi Matt.

I’m in exactly the same situation (including the fact I’m also UCC clergy). I have the same question. We are 501(c)3 under the denomination, and I am paying under IBR with Direct Loans. The way I read it, I think we should clarify. There is a clause that says those who have a religious vocation do not, but it’s only under the section relating to non 501(c)3 groups. I emailed the Dept. of Ed. ombudsman, and she basically said she didn’t know.

Heather is right about us needing to figure this out. I’d like to know if I’ll be done in 10 years with no tax penalty, or 25 with a major one. I just heard grads from one UCC seminary graduate with an average of $55,000 in debt from seminary alone. We get out and make under $40,000 starting out. It just doesn’t work.

Just, for further clarification, these are the regs. We qualify under section 3. We don’t under section 5. But, as it reads section 5 only applies if the criteria in section 1,2,3, or 4 are not met. So, shouldn’t we qualify?

Public service organization means:
(1) A Federal, State, local, or Tribal government organization, agency, or entity;
(2) A public child or family service agency;
(3) A non-profit organization under section 501(c)(3) of the Internal Revenue Code that is exempt from taxation under section 501(a) of the Internal Revenue Code;
(4) A Tribal college or university; or
(5) A private organization that—
(i) Provides the following public services: Emergency management, military service, public safety, law enforcement, public interest law services, early childhood education (including licensed or regulated health care, Head Start, and State funded pre- kindergarten), public service for individuals with disabilities and the elderly, public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in heath care practitioner occupations and health care support occupations, as such terms are defined by the Bureau of Labor Statistics), public education, public library services, school library or other school- based services; and(ii) Is not a business organized for profit, a labor union, a partisan political organization, or an organization engaged in religious activities, unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing.

Exactly.  That’s my interpretation.  Section 5 should only apply to people who do NOT work in government or a 501c3.

I’ve got some advice for how to proceed if you’ve got the motivation to work on this (which you obviously do!).  Give me a call: 843-441-3656.

Rev. Matt, 

Send me your email address to .(JavaScript must be enabled to view this email address) and I’ll loop you in on this.

Best,
Heather

Any updates on this?  Just wondering if clergy working for 501(c)(3) churches or parachurch organizations would qualify?

Heather,

You mentioned at your seminar today that the DoE is expected to exclude 501(c)(3) employees whose jobs involve “proselytizing” from PSLF.  Where is this in the rulemaking process? Is it open for comments?  My husband (a seminary student) and a number of his friends want to know who they can contact about this potential change.