Public Service Loan Forgiveness

If you are employed by a nonprofit or government and are one of the 34 million borrowers who have federal student loan debt, you may be eligible for loan forgiveness, cancellation, and/or consolidation 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. 

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

The program helps attract talent to work at 501(c)(3) charitable nonprofits, 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.

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, including at 501(c)(3) charitable nonprofits, 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 August 31, 2022, for federal student debt under a statement by the U.S. Department of Education. This period of forbearance will count as payments towards the minimum requirements for PSLF so long as the borrower continues to be employed full time at a qualifying employer.

Additional borrowers may also be eligible for forgiveness under a Limited PSLF Waiver through Oct. 31, 2022 and for those previously in forbearance or income driven repayment plans. 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.

The Department of Education has announced new proposed regulations, which will expand eligible borrowers for forgiveness under PSLF. Key provisions allow more kinds of payments (certain types of deferment, forbearance, and lump sum, and late payments) to count as qualifying payments, clarifying the definitions of full-time employment and qualifying employer, and codifying the reconsideration process. Other beneficial provisions would provide a hold-harmless option for deferment or forbearance, automate progress toward forgiveness, and eliminate prospective interest capitalization not required by statute.

The proposed regulations are expected to be published soon with public comments open for 30 days following publication. The Department aims to finalize rules by Nov. 1, 2022 with an effective date no later than July 1, 2023. See our Comments to the Department of Education and Chart on the Department of Education Proposed Rulemaking for PSLF for more information.

Take Action

Learn about accessing PSLF: 

On January 27, 2022, the National Council of Nonprofits, in partnership with the Student Borrower Protection Center, held a webinar highlighting updates to the program, guidance on how to navigate the new process, and shared policy advocacy updates.

View the webinar recording

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. Learn more with the PSLF Help Tool, available at www.StudentAid.gov/PSLF.

Additional resources are available at:

• The Institute of Student Loan Advisors Corporation - www.freestudentloanadvice.org/
• Student Borrower Protection Center - www.protectborrowers.org/

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.

Related Insights & Analysis

• Comments to the Department of Education - Notice of Proposed Rulemaking, National Council of Nonprofits, Aug. 8, 2022.
• Good News for Public Service Loan Forgiveness (PSLF) Borrowers, National Council of Nonprofits blog, Oct. 12, 2021
• Comments to the Department of Education - Request for Information, National Council of Nonprofits, September 23, 2021.
• Comments to the Department of Education, BJC and National Council of Nonprofits, January 10, 2020.

Additional Resources

• Public Service Loan Forgiveness (PSLF), Federal Student Aid
• Fact Sheet: Public Service Loan Forgiveness (PSLF) Program Overhaul, U.S. Department of Education, Oct. 6, 2021.
• Coronavirus and Forbearance Info for Students, Borrowers, and Parents, FedLoan Servicing
• Preserve PSLF, The Coalition to Preserve PSLF