Student Loan Forgiveness for Non-Profit Employees
For 2017, Non Profit Student Loan Forgiveness programs remain widely accessible for employees of all 501(c)(3) organizations, as well as for others not traditionally considered “non profit” employees.
In fact, the Public Service Loan Forgiveness Program (PSLF), which is the official name of the student loan debt forgiveness program for nonprofit workers, remains the absolute best student loan forgiveness program on offer, anywhere.
Stemming from President Obama’s Student Loan Forgiveness Reforms, PSLF benefits were doubled, and the program offers total Federal Student Loan Forgiveness after just 10 years.
But perhaps best of all is that unlike many of the other available student loan forgiveness programs, Non-Profit Student Loan Forgiveness benefits are simple, and straightforward. To receive your Federal loan forgiveness at the 10 year mark, all you need to do is work for a qualifying organization (any 501(c)(3) will count) for at least 30 hours per week, and make your monthly student loan payments in-full, on-time, and under one of the popular Income-Based Student Loan Repayment Plans.
Why Should You Pursue PSLF Benefits?
Out of all the existing student loan relief options available to Americans in 2017, PSLF is by far the most powerful, most helpful, and most useful.
PSLF allows anyone who works at a qualifying not-for-profit institution who makes regular monthly student loan payments for 10 years to earn total forgiveness on their Federal student loan debt, which is far faster than any other program, and is especially powerful for people with high debt loads, like those who attended private schools, law school, medical programs, dental school or other expensive programs.
How Does Non Profit Loan Forgiveness Work?
To qualify for student loan forgiveness for nonprofit employees, you must:
- Have an eligible loan (only Federal Direct loans qualify for PSLF benefits)
- Have an eligible job (only “Public Service” jobs qualify for PSLF benefits)
- Make 120 monthly student loan payments, then you’ll receive forgiveness
Pretty simple, right?
Things get slightly more complicated when the rubber meets the road, but to tell you the truth, this is the easiest Government debt forgiveness program to qualify for, so don’t be afraid to pursue your PSLF benefits if you think you may qualify (it’s totally worth it).
What Loans Are Eligible for Non Profit Loan Forgiveness?
The only loans that qualify for non-profit forgiveness are those issued under the William D. Ford Federal Direct Loan Program.
This means that other types of loans, like FEEL Loans, Stafford Loans, Perkins Loans, Grad Plus Loans and any other type of Federally-funded student loan do not qualify for PSLF.
However, if you have one or more of those loans, you might be able to consolidate them into a Direct Consolidation Loan, which would then be eligible for PSLF.
What Jobs Qualify for Non-Profit Loan Forgiveness?
There’s a huge variety of jobs that qualify for the Public Service Loan Forgiveness program, including each of the following positions:
- Jobs with a Federal, State or Local Government Agency
- Jobs with a Section 501 (c)(3) non-profit tax exempt organization
- Jobs with the military, emergency management, public safety of law enforcement
- Jobs with public health services, public education, public library services or school-based services
- Jobs with public interest law services, early childhood education, public service for people with disabilities or public service for the elderly
Pretty much any job related to any sort of public service work will qualify you for the benefit, but any job with an organization that’s qualified as a non-profit 501(3)(c) will guarantee that you qualify for Public Service Loan Forgiveness.
The major stipulation on the employment piece is that you’ll have to be employed full-time, which is defined as working for at least 30 hours per week, averaged annually. That means you don’t have to work 30 hours a week every week, but 30 hours per week on average over each year.
Please note, however, that those 30 hours per week of work cannot include time you spent on religious instruction, attending worship services, or performing any kind of proselytizing.
What Payments Count Toward the 120 Threshold?
To qualify for non profit school loan forgiveness, you’ll need to make 120 monthly student loan payments that satisfy each of the following conditions:
- Payments Cannot Be Late – You can’t make payments after their due date, but will have to actually issue them on time, according to your Student Loan Repayment Plan
- Payments Cannot Be Partial – You can’t make 120 incremental payments, but will have to actually issue monthly payments for the full amount due according to your repayment plan
- Payments Must be Scheduled – You can’t make 120 payments in 3 months, but will have to actually issue them monthly, according to the schedule of your repayment plan
To make things a little clearer, you can think of the 120 payments in terms of the number of years it will take to qualify for forgiveness, and consider this a 10 year program (12 payments per year * 10 years = 120 payments).
Unfortunately, the real trick to the program is that only payments made on or after October 1st, 2007 will count toward your 120 payment threshold, so the soonest that you can possibly qualify for nonprofit loan forgiveness is October 1st, 2017. On the bright side, that date is rapidly approaching, and we’re now less than a year away from the first wave of people who will receive non-profit loan forgiveness, as long as President Donald Trump’s Student Loan Forgiveness Program doesn’t wipe out the PSLF Program (he has made statements along those lines recently…).
Which Repayment Plans Are Eligible for Loan Forgiveness?
As of 2017, all of the available Federal student loan repayment plans remain eligible to participate in this program.
Way back in April of 2014, the Government threatened to make sweeping reforms to the PSLF program, including making only income-based plan payments eligible to count toward the 120 payment limit, but there has been zero interest in putting that plan into place.
The only threat I see to the viability of non-profit student loan forgiveness via the PSLF program is President Donald Trump, who has been talking about reforming the entire Federal Student Loan Forgiveness system, and reducing all the complexities of different programs into a single, unified forgiveness option, offered to everyone, regardless of employment, income, loan size, etc., after they’ve made 15 years worth of payments.
Obviously, for those who qualify for PSLF, that would be a much worse deal, since it adds 5 years of payments onto the existing benefit structure. However, like any time that the Government changes the rules of the game while it’s being played, I do anticipate that any changes President Trump initiates would apply only to future borrowers, and that anyone who had already taken out their Federal student loans would remain eligible for the older, better version of forgiveness offered by PSLF.
What Should You Do?
My recommendation to anyone who owes Federal student loan debt is to get enrolled in one of the income-based student loan repayment plans as soon as possible, because they’re typically the best way to pay back your debt, as long as your interest accumulation is covered by a subsidized loan, or you’re willing to make payments to cover interest accumulation so that it isn’t capitalized at a later date, regardless of your potential eligibility for PSLF benefits.
In my opinion, you should try to get one one of the following income-based repayment plans as soon as possible:
- The Income-Based Repayment Plan
- The Pay As You Earn Repayment Plan
- The REPAYE Student Loan Repayment Plan
- The Income-Contingent Repayment Plan
- The Income-Sensitive Repayment Plan
The second reason to enroll in one of the above plans is that if that talk about removing non-income based plans from eligibility for PSLF ever occurs, you won’t have to worry about losing eligibility for loan forgiveness.
Is There a Limit to Loan Forgiveness?
Under the current laws, the nonprofit student loan forgiveness program has no cap, which means that your loans will be forgiven in their entirety no matter how much you owe.
Years ago, there was talk of instituting a limit to non profit loan forgiveness, setting the cap at the arbitrary $57,000 in total relief, but thus far nothing has actually been done to make that into law and I haven’t heard anyone with any power float anything along those lines ever since.
I don’t think there is any chance that this benefit will be reduced, and for now, there’s no limit to the amount of money you can get forgiven.
What Else Could Change?
There’s very little chance of the $57,000 cap being implemented, and along similar lines, the other potential changes the Federal Government discussed a few years back also seem dead in the water. However, because they were discussed publicly, and since they’d be serious changes to the program, I’m leaving this content on this page to make sure that everyone interested in the program is aware of the potential for future changes.
Hopefully, I’m right and we’ll never see any of this stuff put into place. I highly doubt it’ll occur, but again, just to be completely honest and transparent, I’m leaving this content here so that you are fully aware of the potential issues that could arise with the non-profit loan forgiveness program.
Potential changes that have been discussed include:
- High debt borrowers (those with over $57,000 in student loans) will have to make 300 payments to qualify for loan forgiveness
- Only payments made under the income based repayment plans will be counted toward the required monthly payments threshold
- Married borrowers determining their income for the purposes of calculating monthly student loan payments will no longer be able to separate out their spouse’s income
What will happen if these changes are enacted?
Those borrowers with excessive, unbearable levels of Federal student loan debt are going to have a significantly tougher time getting out from under it.
How Do I Actually Apply For Loan Forgiveness?
This part includes a couple of unknowns, because the Federal Government has stated that once you’ve satisfied the payments threshold, you should apply for forgiveness using the official application form, but it’s a form that does not yet exist.
It’s been promised that this form will be created well in advance of October 1st, 2017 (the first day that anyone can qualify for PSLF forgiveness since only payments from October 1st, 2007 count), but as of now it still hasn’t been issued. I will keep checking for it, and post a link to it here as soon as the form becomes public.
Knowing that the Government still has plenty of time to put one together before the deadline in 2017, I don’t anticipate seeing this thing actually appear until later this year.
What Do You Think?
Is this program fair? Is it valuable?
What do you think about the changes that were proposed? Would they increase the long-term viability of the program, or simply piss everyone off who was hoping to qualify for PSLF in the first place?
Let me know your thoughts in the comments below!
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