Student Loan Forgiveness for Non-Profit Employees
In 2016, 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, Public Service Loan Forgiveness Program (PSLF), which is the official name of the student loan debt forgiveness program for nonprofit workers, just recently got a little bit better!
Thanks to the recent President Obama Student Loan Forgiveness Reforms, PSLF benefits were doubled, and the program now offers total Federal Student Loan Forgiveness after just 10 years of making qualifying payments, and completing eligible service.
Why Should You Consider PSLF?
Out of all the existing student loan relief options available to Americans in 2016, PSLF is by far the most powerful, most helpful, and most useful.
Read on to find out how you can take advantage of this fantastic loan forgiveness program simply by working for a qualifying not-for-profit institution and making your regular monthly student loan payments for 10 years.
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?
Unfortunately, things get a little more complicated where 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 scared!
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 anything related to any sort of public service, but especially work through any organization that’s qualified as a non-profit 501 (3)(c) will enable you to qualify for the loan forgiveness program.
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.
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.
Which Repayment Plans Are Eligible for Loan Forgiveness?
As of January, 2016, 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 thus far that looks like all bark, and no bite.
To tell you the truth, I would recommend that you get enrolled in one of the income-based student loan repayment plans anyway, 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).
In my opinion, you should try to get one one of the following income-based repayment plans:
- The Income-Based Repayment Plan
- The Pay As You Earn 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.
There’s been 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.
Later this year, I anticipate this issue being brought up again during discussions over the Reauthorization of the Higher Education Act, and I’ll update this page as soon as any news emerges.
For now, there’s no limit to the amount of money you can get forgiven.
What Else Could Be Changing?
As if the new $57,000 cap weren’t bad enough, it’s possible that other major negative changes could be enacted, but again, the Federal Government have been all bark and no bite on these issues, thus far.
Additional 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 hasn’t been posted online.
Know 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 some time during 2016.
Perhaps during the 2016 Presidential election things will heat up, and we’ll start seeing some movement on these issues, but for now, it’s all theoretical.
What Do You Think?
Is this program fair? Is it valuable?
What do you think about the changes that are being proposed, and which could go live as soon as this year?
Let me know in the comments below!
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