In response to the U.S. Supreme Court decision in Trinity Lutheran Church of Columbia Inc. v. Comer, the Department of Education has amended regulations regarding the eligibility of faith-based entities to participate in the Federal Student Aid programs authorized under Title IV of the Higher Education Act (HEA) of 1965 and the eligibility of students to obtain certain benefits under those programs.

Among other things, this means that starting July 1, employees at nonprofit organizations affiliated with religious entities qualify for the federal public service loan forgiveness (PSLF) program.

Some employers offering student loan repayment benefits educate employees about loan forgiveness programs or connect them with someone who can help. To aid nonprofit employers in their efforts , together with Savi, TIAA recently launched a program that helps employees reduce their monthly payments and qualify over time for the PSLF program.

The Supreme Court case referenced in the Department of Education’s new regulations involved a licensed preschool and daycare center that was initially opened as a nonprofit corporation but merged with Trinity Lutheran Church of Columbia in 1985. The preschool applied for a Playground Scrap Tire Surface Material Grant offered by the Missouri Department of Natural Resources but was denied because of a section of the Missouri Constitution that states, “no money shall ever be taken from the public treasury, directly or indirectly, in aid of any church, section or denomination of religion.”

Trinity sued, arguing that the denial of its application violated the equal protection clause of the 14th Amendment as well as the First Amendment’s protections of freedom of religion and speech, according to LexisNexis.

Lower courts ruled in favor of the Missouri Department of Natural Resources. However, the Supreme Court held that the department violated a church’s rights under the free exercise clause of the First Amendment. The high court said the department’s policy discriminated against otherwise eligible recipients by disqualifying them from a public benefit solely because of their religious character and, in doing so, imposed a penalty on the free exercise of religion.

Among other things, the Department of Education’s new regulations:

• Restore the ability of members of religious orders, who also are pursuing courses of study at institutions of higher education, to participate in the Title IV programs by eliminating regulatory provisions that treat members of religious orders as having no financial need in certain circumstances;
• Allow certain borrowers, who serve as full-time volunteers in tax-exempt organizations and give religious instruction, conduct worship service, proselytize or fundraise to support religious activities as part of their official duties, to defer repayment of Federal Perkins Loans, National Direct Student Loans (NDSLs) and Federal Family Education Loan Program (FFEL) loans; and
• Provide an interpretation of the PSLF regulations that permits borrowers who work for employers that engage in religious instruction, worship services or proselytizing to qualify for PSLF.

In a “Student Loan Tip Sheet,” Savi says, “Given how PSLF works, student loan borrowers will be able to retroactively count previous years of employment for religious organizations toward the service requirement for the program—meaning eligible borrowers could get forgiveness on their loans in a matter of weeks.”