Student Loan Forgiveness for Non-Profits

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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.

More than 42 million people nationwide have education loans totaling more than $1.3 trillion in student debt. Fulltime 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 (38 percent) work at 501(c)(3) nonprofit organizations. The remaining 62 percent work in government. Less than 1 percent work at other qualifying organizations.

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 eliminate PSLF for future borrowers. If passed, the legislation would not impact nonprofit workers already enrolled in the program. The U.S. Department of Education (DOE) previously proposed eliminating PSLF in its budget in 2018. Despite these attempts, the Consolidated Appropriations Act of 2018 section 315, commonly referred to as the omnibus spending bill, provided $350 million for the PSLF to temporarily expand loan forgiveness for certain borrowers under different repayment plans.

Senator Heitkamp (D-ND) introduced the Help Encourage a Lifetime of Public Service Act (HELPS Act) on June 25 to expand the Public Service Loan Forgiveness program and “encourage more students to enter public service professions.” The legislation waives interest accrual under PSLF and directs the U.S. Department of Education to streamline the employment certification process and align deadlines for borrowers

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