On January 31, 2012, just a few days ago, my family’s financial plans were unexpectedly upended by the Federal Department of Education.

For nearly the last two years, we had planned to enroll in the Department’s Public Service Loan Forgiveness (PSLF) program as a means of coping with the over $150,000 in education debt we accumulated while in seminary. We had complied with all of the program’s requirements:

1.     We consolidated our loans through the Federal Direct Loan program (at a higher interest rate);

2.     We entered Income Based Repayment status (by contributing 10% of our yearly income to pay off the debt);

3.     My wife is employed full-time at a 501(c)(3) not-for-profit and intended to work for one for another eight years (a total of 10-years of not-for-profit employment is required).

Then, on the 31st, we learned that the Department of Education introduced a new policy: Anyone who performs “religious instruction” or “worship services” as a part of her employment is now ineligible for PSLF. That meant that my wife, a congregational rabbi, is no longer eligible.

The Department of Education contends that this is not new policy, just a clarification of existing rules. This is simply incorrect, however. The legislation that created PSLF in 2007 (the “College Cost Reduction and Access Act”) affirms that all Americans who (a) consolidate their education loans through the Federal Direct Loan program and enter the Income Based Repayment and subsequently (b) are employed by a 501(c)(3) not-for-profit or a “private public service organization” for ten years (and make their regular monthly loan payments during that time) are eligible to have the remainder of their debt forgiven through PSLF. The Federal regulations that govern PSLF—which were instituted in 2008—do introduce a religious employment exclusion, but that exclusion applies only to individuals working for “private public service organizations” not 501(c)(3) not-for-profits.

In fact, this point was so abundantly clear, that the forms the Department of Education produced for the PSLF program prior to January 31st require individuals to certify if they work for EITHER a “non-profit organization under Section 501(c)(3) of the Internal Revenue Code” OR a “private organization that provides…public services…unrelated to religious instruction, worship services or any form of proselytizing.”

Needless to say, our family is facing our financial future with great uncertainty. Had the government introduced this religious exclusion three years ago when it was formulating the PSLF regulations, we would have known we were ineligible from the start and made plans accordingly. Now, however, after making financial and career plans in anticipation of our eligibility for PSLF, and after consolidating our loans at a higher interest rate, we feel we are the victims of an unprecedented bait-and-switch.

We are now assembling a coalition of American faith-leaders from diverse traditions concerned about this policy. Please consider signing our online petition and Facebook group.

If you are interested in learning more about this issue, feel free to contact me by e-mail at clergyserve[at]gmail.com.

Additionally, here are links to the relevant legislation, regulations and policy documents:

1. The “College Cost Reduction and Access Act” of 2007 (the law that created PSLF), see “Sec. 401. Loan forgiveness for public service employees.”

2. The Department of Education’s “Final Regulations” of October, 2008, governing PSLF.

3. The new eligibility policy from January 31, 2012; see page 2.