Many readers of this blog are graduate students, faculty, or clergy. Many also have some indebtedness for their education in the form of student loans. Student loan debt is generally considered a more desirable form of debt since it represents an investment in your future employability. However, you cannot eat employability!
Hiring and salaries for ministers and faculty (especially in the humanities) have generally not kept pace with the cost of living. It’s also increasingly difficult to find a position. In such a situation a monthly student loan payment can be a real drag on a family’s cash flow.
Cary McCall writes about how ministers and non-profit employees can get their student loans forgiven over a ten year period by participating in two government programs.
I’d recommend reading the article and doing your own due diligence, but I will give you an overview of the two-pronged strategy here:
- Participate in the “income based repayment” (IRB) program. In order to do this you need consolidate your loans with the government. They will then index your monthly payment to your adjusted gross income. For many clergy this can produce a monthly payment $0–the government is paying your loan for you.
- Apply for the Public Service Loan Forgiveness program. If you’re an employee of a 501(c)(3) entity you qualify. Put simply: as long as you work 30 hours or more per week at one (or more, if part-time) 501(c)(3) entity and make your regularly scheduled loan payments for 10 years your loan (principle and interest) will be forgiven at the end. Here’s the important thing: you have to be in the Direct Student Loan program (see 1 above). And…in order for this to make the biggest impact, you need to minimize the principle and interest you’re paying right now (i.e., get on the IBR program) so that at the end of the payment period (10 years) your loan will be forgiven. NOTE: If at any time you leave the employment of a qualified entity, your participation in the program will be terminated–it’s all or nothing, baby.