Public Service Loan Forgiveness

Printer-friendly version

If you are employed by a nonprofit or government and have student loan debt, you may be eligible for loan forgiveness, cancellation, and/or consolidation of federal student loans under the Public Service Loan Forgiveness program (PSLF). Created under the College Cost Reduction and Access Act of 2007, PSLF allows borrowers who work full time for nonprofits and government agencies to have their outstanding debt forgiven tax-free on Federal Direct Loans, after making 120 qualifying monthly payments under a qualifying repayment plan. Borrowers could apply for forgiveness under PSLF starting in October 2017. On October 6, 2021, the U.S. Department of Education announced a temporary expansion to provide more borrowers access to forgiveness. Nonprofit workers who believe they are eligible for forgiveness or wish to have their employment at their current charitable nonprofit employer certified should take action through the PSLF Help Tool, available at www.StudentAid.gov/PSLF. 

Why It Matters

More than 44 million people nationwide have education loans totaling more than $1.6 trillion in student debt. Full time employees of nonprofit 501(c)(3) organizations, government employees, AmeriCorps and Peace Corp workers, and some other public service organization employees with certain types of student loans can receive forgiveness of outstanding debt after working full time and making payments for ten years. The program helps attract talent to the sector, encourages and incentivizes employees to remain in the sector, and provides relief for public service professionals who are often paid less than other employment opportunities.

Borrowers must certify that the public service employment qualifies under the program, but do not need to do so before applying for forgiveness at the end of the 10-year period. Of the borrowers who have submitted and had employment certification forms approved so far, nearly two out of five borrowers (38 percent) work at 501(c)(3) nonprofit organizations, according to FedLoan Servicing. The remaining 62 percent work in government. Less than 1 percent work at other qualifying organizations. 

The original Eligibility Requirements include the following. Some requirements have been expanded under the temporary Limited PSLF Waiver.

  • Loan must be through the Federal Direct Student loan program, specifically the “William D. Ford Federal Direct Loan (Direct Loan) Program". Other types of loans may qualify under the temporary Limited PSLF Waiver, but the borrower may need to consolidate the loan programs and payments by Oct. 31, 2022.
  • After 120 qualifying payments (this usually takes 10 years) employees in certain public service jobs may be eligible for loan forgiveness as long as their loans are not in default, and their loans are under a qualifying repayment plan. 
  • Qualifying employment includes:
    • Employment with a government agency (federal, state, local or tribal)
    • Employment with a charitable nonprofit tax-exempt under 501(c)(3)
    • Full time Americorps or Peace Corps members

Where We Stand

As proven job creators, nonprofits can and should participate in the development of job growth policies at the federal, state, and local levels. The National Council of Nonprofits strongly endorses policies that promote job creation in all sectors of the economy, especially policies that promote and incentivize employment at charitable nonprofits.

Public Policy Agenda

Status

Borrowers will automatically be placed into forbearance with 0% interest rates through Jan. 31, 2022, for federal student debt under a statement by the U.S. Department of Education. An automatic suspension of payments will apply to any borrower more than 31 days delinquent. The U.S. Department of Education has announced that forbearance will count as payments towards the minimum requirements for Public Service Loan Forgiveness. However, the borrower must continue to be employed full time at a qualifying employer during the forbearance period. See Coronavirus and Forbearance Info for Students, Borrowers, and Parents for more information. On October 6, 2021, the U.S. Department of Education announced a temporary expansion to provide more borrowers access to forgiveness. Nonprofit workers who believe they are eligible for forgiveness or wish to have their employment at their current charitable nonprofit employer certified should take action through the PSLF Help Tool, available at www.StudentAid.gov/PSLF.  Additional information is expected soon.

Background

In 2017, federal legislation to reauthorize the Higher Education Act, titled the Promoting Real Opportunity Success and Prosperity through Education Reform (PROSPER) Act (H.R. 4508) would have eliminated PSLF for future borrowers. In September 2019, the Government Accountability Office released a report stating that only 1 percent of applicants for Temporary Expanded Public Service Loan Forgiveness (TEPSLF) had received forgiveness. Direct contact, recounts, correcting repayment plans, and follow up is key to approval after a denial under TEPSLF. In December 2019, Secretary DeVos proposed creating a separate federal agency to manage all federal student loan debt. 

In February 2019, a federal district court judge found the US Education Department had changed two of its policies retroactively "without properly informing borrowers or considering the impact on the borrowers who were relying on its original guidance" in regards to American Bar Association employees and other public interest attorneys. Nine members of the American Federation of Teachers filed a class-action lawsuit in federal court claiming student loan servicer Navient misled borrowers from accessing the loan forgiveness program. The New York Attorney General sued the Pennsylvania Higher Education Assistance Agency and FedLoan Servicing on October 3, 2019 stating that "deceptive, unfair, and abusive practices in administering the federal program have contributed greatly to the large number of rejected PSLF applicants." Discussions to make potential changes to the program are ongoing.

In October 2021, the American Federation of Teachers settled a lawsuit from 2019 with the U.S. Department of Education to hold the Department accountable for failed management of the PSLF program. The settlement affects borrowers beyond teachers, including nurses, firefighters, and other public service workers, and provides for reconsideration and automatic review for certain borrowers whose applications were denied and detailed notices regarding number of remaining payments, how to determine qualifying payments, and contact information for guidance.

Take Action

Nonprofit Employees With Student Loan Debt:

Make sure you have the correct loan type and then are on track for eligibility by submitting the Employment Certification for Public Service Loan Forgiveness form (Employment Certification form). Submit this form periodically during employment; once you do this, the student loan program will contact you to let you know if your loan repayments are on track to qualify as PSLF payments. Learn more:

Nonprofit Employers:

Spread the word! Many nonprofit employees aren’t aware that they may qualify for student loan forgiveness. Email a link to this webpage to nonprofit employees who need to know.

Additional Resources

Recent News

Category: 
Advocacy
Employment
Tags: 
Nonprofit Employment
Student Loans
Loan Forgiveness

Find Your State Association of Nonprofits

Connect with local resources and expertise

Find

Connect With Us

1. Sign up for updates

Stay up-to-date with the latest nonprofit resources and trends by subscribing to our free e-newsletters.

2. Follow us on social media