These Nonprofit Employee Can Get Student Loan Forgiveness
May 9, 2024
Non-profit organizations employ the third-largest workforce of any industry, outpacing manufacturing, construction, and finance.
If you are one of the millions of people employed by a non-profit organization, you know the work can be rewarding, but the salaries are often less than you could get in the private sector. If you have outstanding student loan debt, working for a non-profit can make it difficult to afford your payments.
Luckily, there are student loan forgiveness programs for non-profit workers. You could qualify for partial or total student loan forgiveness depending on your loan type and employment. These are the leading programs that offer student loan forgiveness for non-profit jobs:
1. Public Service Loan Forgiveness (PSLF)
PSLF is a federal program for borrowers with federal student loans. With this program, you can qualify for loan forgiveness if you work for a non-profit organization full-time for at least 10 years and make 120 qualifying monthly payments. Through PSLF, you can get a substantial amount of your debt forgiven; PSLF will eliminate 100% of your remaining federal student loan debt after you meet the program’s requirements.
And per the IRS, any loan balance forgiven under PSLF isn’t considered taxable income, so you won’t need to worry about any large federal tax bills. However, your state may tax you on your forgiven loan balance.
PSLF is a valuable program, but its eligibility requirements are rigorous. Those who don’t qualify for PSLF could opt for an income-driven repayment (IDR) plan like Pay As You Earn (PAYE) or Saving on a Valuable Education (SAVE). Instead of paying a set amount based on your original loan agreement, these plans base your total monthly student loan payments on your income, making them more manageable.
Depending on the IDR plan, you could be in repayment for 20-25 years. Your remaining student loan balance will be forgiven at the end of your repayment period. Forgiven balances are exempt from federal income taxes until the end of 2025, though tax rules could change after that.
PSLF Eligibility Criteria
To be eligible for PSLF, you must meet the following requirements.
- You must have direct federal student loans
- You must be enrolled in a qualifying repayment plan
- Income-driven repayment plans are qualifying payments
- You must work for a qualifying non-profit organization that’s a 501(c)(3) or government agency full-time for at least ten years while your loans are in repayment.
- You must make 120 monthly payments under a qualifying payment plan.
Important: The government temporarily expanded PSLF’s requirements to allow more borrowers — such as those who made payments under non-qualifying plans — to obtain loan forgiveness, but the expanded program ended in 2022.
How to Apply for PSLF
If you plan on pursuing PSLF, you must notify your loan servicer. The loan servicer will transfer you to a new servicer that handles PSLF applicants.
To apply for PSLF, follow these steps:
- Check to make sure that your loans are eligible for PSLF.
- Certify your employment every year.
- Make the required 120 monthly payments.
- Generate and sign the PSLF application form once you complete the 10-year service term and 120 monthly payments.
You can use the PSLF Help Tool to determine if your employment qualifies for PSLF and Temporary Expanded PSLF and generate the necessary forms to apply for loan forgiveness.
One-Time Automatic Account Adjustment for PSLF
Recent legislation may help federal student loan borrowers automatically get closer to loan forgiveness under PSLF. The Biden Administration enacted a one-time, automatic account adjustment as part of its 2022 student loan forgiveness plan, and it expanded the types of payments that count toward PSLF.
Under this new adjustment, any payments you made while in an eligible role starting in October 2007 may count toward PSLF, regardless of whether they were late or partial payments. Before this legislation was enacted, only on-time payments and those made while a borrower was on an eligible repayment plan were counted toward PSLF.
2. Loan Forgiveness for Healthcare Workers
Healthcare workers in some states may be eligible for the National Health Service Corps (NHSC) State Loan Repayment Program (SLRP), which could help ease the burden of paying off medical school debt.
The program provides grant funding to states and territories to operate their own loan repayment assistance programs so they can recruit healthcare workers to serve in high-need areas.
It’s a valuable source of loan forgiveness for nurses, physician’s assistants, and other healthcare professionals. The total amount of loan forgiveness can vary by state, but some will forgive up to 100% of your total outstanding student loan debt.
State Loan Repayment Program (SLRP) Eligibility Criteria
Although eligibility requirements vary by state, you generally have to meet the following criteria:
- You must be a U.S. citizen or naturalized citizen
- You must have a current, full professional license, certificate, or registration in the state where you work.
- You must work at an approved site in a designated healthcare professional shortage area (HPSA) while providing direct patient care for a specific period, such as two to four years.
- You must agree only to use program funds to repay qualifying student loans.
- You must provide primary health services in an eligible discipline, such as:
- Allopathic Medicine (MD)
- Certified Nurse Midwife (CNM)
- Osteopathic Medicine (DO)
- General and Pediatric Dentistry (DDS/DMD)
- Health Services Psychologist (HSP)
- Licensed Clinical Social Worker (LCSW)
- Licensed Professional Counselor (LPC)
- Marriage and Family Therapist (MFT)
- Pharmacist (Pharm)
- Physician Assistant (PA)
- Psychiatric Nurse Specialist (PNS)
- Registered Dental Hygienist (RDH)
- Registered Nurse (RN)
- Substance Use Disorders Counselor
How to Apply for SLRP
Application requirements vary based on the state operating the loan forgiveness program. Contact your state’s program office for details about the application process.
3. Loan Forgiveness for Teachers
If you’re an educator, you may be eligible for partial loan forgiveness for teachers through the federal Teacher Loan Forgiveness or Perkins Loan Teacher Cancellation programs.
- Teacher Loan Forgiveness: Eligible teachers can qualify for up to $17,500 in loan forgiveness if they work full-time for five full, consecutive academic years at a qualifying school.
- Perkins Loan Teacher Cancellation: If you have outstanding federal Perkins loans, you may have a portion of your loans forgiven for each year you teach at a qualifying school. The program can forgive up to 100% of your debt:
- 15% canceled per year for the first and second years of service
- 20% canceled for the third and fourth years
- 30% canceled for the fifth year
Teacher Loan Forgiveness Eligibility Criteria
To qualify, you must meet the following requirements:
- You must teach full-time for five full, consecutive academic years.
- You must work for a low-income elementary school, secondary school, or educational service agency.
- You must have federal Direct Subsidized or Unsubsidized Loans.
To qualify for the maximum amount of loan forgiveness, you must be a highly qualified teacher in high-need areas, such as science or special education. Otherwise, you may be limited to $5,000 of loan forgiveness.
How to Apply for Teacher Loan Forgiveness
After you’ve completed the required five years of service, fill out and submit a Teacher Loan Forgiveness Application to your loan servicer. Your employer must complete the application’s certification section. If you have multiple loan servicers, you must complete a separate application for each one.
Perkins Loan Teacher Cancellation Eligibility Criteria
Although the Perkins Loan program is no longer active, borrowers with outstanding Perkins Loans can still take advantage of the Perkins Loan Teacher Cancellation program if they meet the following requirements:
- You must work full-time in a public or non-profit elementary or secondary school.
- You teach in a school that serves low-income families, provides special education, or teach in the fields of mathematics, science, foreign languages, or bilingual education.
How to Apply for Perkins Loan Teacher Cancellation
Schools handle Perkins Loans, so applicants for Perkins Loan Teacher Cancellation must contact the school loan administrator or the loan servicer for application details.
Do all Nonprofits Qualify for Student Loan Forgiveness?
Unfortunately, not all nonprofit employees qualify for student loan forgiveness under PSLF or other programs, but many do. The following nonprofits are generally eligible:
- 501(c)(3) organizations
- Nonprofits that aren’t 501(c)(3) but provide an eligible public service
- Charter schools
- Religious organizations
- Government organizations
- Peace Corps or AmeriCorps
Alternative loan forgiveness options
You may qualify for student loan forgiveness for working at a nonprofit organization, but not everyone will be eligible for the above programs. However, you may be eligible for other loan assistance programs through your state. Options may include nonprofits, charities, and other organizations that help pay off student loans. Contact your state education agency to see what programs are available.
As you saw in the information listed above, most loan forgiveness programs are limited to borrowers with federal student loans. If you have private student loans and are having trouble managing your debt, you may not be eligible for loan forgiveness. However, student loan refinancing is one way to make your payments more manageable. Refinancing could lower interest rates, lower your student loan payment, or help you save money over the life of your loan.