Student Loan Forgiveness for Non-Profit Employees
In 2018, Non Profit Student Loan Forgiveness programs will 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 Federal Student Loan Forgiveness Program on offer, as it provides complete loan forgiveness after making just 10 years of monthly payments, and also allows you to avoid paying taxes on the debt you have forgiven!
To receive Federal loan forgiveness at the 10 year mark, all you need to do is work for a qualifying non profit 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 excellent Income-Based Student Loan Repayment Plans.
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 on an Income-Based Repayment Plan
Once you’ve satisfied these requirements, you’ll receive a complete discharge on your eligible Federal student loans, meaning that your student loan debt will be cancelled entirely.
But that’s not all, because non profit loan forgiveness benefits are also one of the only Federal forgiveness benefit programs that doesn’t require you to claim the amount of money forgiven as taxable income, which means they don’t generate any additional tax liabilities.
And that’s a huge deal, because when you have to pay taxes on forgiveness benefits, that can end up costing you tens of thousands of dollars. For more information on this topic, please visit my page about Student Loan Forgiveness and Taxable Income Laws.
In my opinion, Non-Profit Loan Forgiveness benefits are the best, easiest, and most effective debt forgiveness benefits currently available to anyone, so if you think you have any chance at qualifying for them, I highly recommend pursuing the opportunity.
Why Should You Pursue PSLF Benefits?
Out of all the existing student loan relief options available to Americans in 2018, PSLF is by far the most powerful program, as it’s the quickest way to earn Complete Student Loan Forgiveness.
PSLF lets you get rid of your loans after making just 10 years worth of payments on them, and payments set based on your annual income, which for some lucky non-profit workers may mean paying out very little actual money before earning total forgiveness.
In fact, it’s even possible to qualify for a complete student loan discharge via PSLF without spending a single cent of money, since you could qualify for $0 monthly payments, make those payments for 10 years, then have your ENTIRE LOAN BALANCE wiped out!
This is an especially important program for people with high debt loads, and low incomes, like for anyone who attended private schools, law school, medical programs, dental school or other expensive programs, and who now works in a low paying position or field.
But Before I Continue…
If you’re in a hurry to deal with your loans and you don’t want to spend a ton of time researching how it all works, or if you’ve already read about it, but are still confused about how to qualify for PSLF, then you should call the Student Loan Relief Helpline for assistance, at 1-888-906-3065.
The Student Loan Relief Helpline is staffed by actual student loan debt relief experts who can review your specific financial situation, then recommend what you need to do to get rid of your loans as quickly and cheaply as possible.
When you call the Helpline, simply explain your student loan and employment situation to them, then ask if you’re eligible for the Public Service Loan Forgiveness Program, and you should be able to get a quick answer for free.
When they start pitching you paid services, like research, document prep, and legal services, you can either opt to sign up for them (saving you the time, hassle and confusion of doing it all yourself), or you can simply decline them and you won’t end up having to pay any money at all!
To reach the Student Loan Relief Helpline, call 1-888-906-3065.
What Loans Are Eligible for Non Profit Loan Forgiveness?
As of the rules for 2018, the only loans that qualify for non-profit forgiveness benefits (via PSLF) are those that were 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 Payment 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 anyone could possibly qualify for nonprofit loan forgiveness was October 1st, 2017.
Fortunately, it looks like applications are being reviewed and approved by the Department of Education (even though I’m sure Betsy DeVos would like to prevent that if she could…), so you’re in a good spot if you’ve satisfied the eligibility conditions for receiving forgiveness benefits, and you should get your application in NOW if you’ve finished making your 120 payments!
Which Repayment Plans Are Eligible for Loan Forgiveness?
All of the available income-based Federal student loan repayment plans remain eligible to participate in this program.
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 President Trump’s Student Loan Debt Reforms will only apply 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?
I can finally offer advice on this topic, because the official Public Service Loan Forgiveness Application form has FINALLY gone live, and you can find it right here.
The form requires all sorts of information about your loans, your employment, your income, etc., and you’ll need to fill it out in full, and accurately, in order to be considered for receiving non-profit loan forgiveness benefits.
Make absolutely certain that you fill out each field completely, and accurately, because ANY MISTAKES could invalidate your eligibility to receive forgiveness benefits, and the worst part about the process is that it could take months to head back from the Department of Education on the status of your application, so you do NOT want to screw this up!
This is one of the only reasons why I recommend that my visitors hire a service like the Student Loan Relief Helpline to help them fill out all the certification documents and other paperwork… as making a mistake on these docs could mean waiting another several months or even years to get your loans wiped out, costing you a ton of money for a simple, stupid mistake!
If you want to make sure that you are doing everything correctly, then don’t be afraid to call the Student Loan Relief Helpline for assistance. You will have to pay for their service, but if the few hundred dollars you pay them ensures your paperwork is complete, and gets you access to tens of thousands of dollars in loan forgiveness benefits, then you’re really not wasting money, right?
You can reach the Student Loan Relief Helpline by calling 1-888-906-3065.
Will I Owe Taxes on the Forgiven Debt?
Unlike most other forms of student loan forgiveness, the Non-Profit Forgiveness benefits offered under PSLF are NOT taxable, and will NOT require you to claim the amount of debt you have forgiven as “taxable income” on your IRS returns, and that’s a big deal.
Why? Because the forgiveness benefits that do lead to tax liabilities can end up costing people thousands or even tens of thousands of dollars.
How? If you receive forgiveness of a $100,000 loan under a different forgiveness benefit plan, the IRS forces you to add that $100,000 of forgiveness to your tax return as income!
Which means that you’d be forced to pay taxes on that $100,000 which got forgiven, at the same rate you pay for regular income (for most Americans, that’s 25% – 35%), meaning you’d owe $25,000 – $35,000!
And unlike your monthly student loan payments, which are stretched out over time so that you only have to pay a small amount of money each month, IRS tax bills are due all at once, meaning you’d have to come up with that money in a single go.
That’s no easy task, and it’s why so many people end up in big trouble with the IRS.
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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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Disclaimer:Information obtained from Forget Student Loan Debt is for educational purposes only. You should consult a licensed financial professional before making any financial decisions. This site receives some compensation through affiliate relationships. This site is not endorsed or affiliated with the U.S. Department of Education.