Nonprofit Employee Student Loan Forgiveness: PSLF & More

• Working for a 501(c)(3) nonprofit can make you eligible for PSLF. This includes roles in hospitals, schools, and various charitable organizations.

• You need to make 120 qualifying payments to achieve PSLF. These payments don’t have to be consecutive but must be under a qualifying repayment plan.

• You can get retroactive PSLF credit for past periods of repayment, deferment, and forbearance through different initiatives implemented by the Biden administration.

If you’re working at a nonprofit (also called a not-for-profit) and wondering if it qualifies for student loan forgiveness, you’re not alone. Many assume that all nonprofit roles qualify automatically, but the reality is more complex—and this can be confusing, especially if you’re counting on forgiveness.

No, not all nonprofits qualify for Public Service Loan Forgiveness. Only specific types meet the criteria, such as 501(c)(3) organizations and government employers.

In the next sections, we’ll break down which types of nonprofits qualify for PSLF, how to verify your employer’s eligibility, and what options are available if your nonprofit doesn’t meet the requirements.

Related

• Biden Student Loan Forgiveness

• Did Student Loan Forgiveness Pass? Latest 2024 Updates

• Government Contractor Student Loan Forgiveness Programs

To qualify for the Public Service Loan Forgiveness (PSLF) program, your employer must be either a government organization or a 501(c)(3) nonprofit that provides certain public services.

Here’s a closer look at the types of nonprofit employers that do and do not qualify:

Nonprofits that qualify:

• Government organizations: This includes local, state, and federal government agencies, tribal governments, and the Peace Corps and AmeriCorps.

• 501(c)(3) nonprofit organizations: Charitable nonprofits recognized by the IRS, such as hospitals and healthcare facilities, educational institutions, and other public service organizations.

Nonprofits that do not qualify:

• Labor unions: These generally do not meet PSLF criteria.

• Political organizations: Nonprofits focused on political campaigning or lobbying also don’t qualify.

During the COVID-19 pandemic, the Biden administration introduced special provisions to help borrowers working in public service, including nonprofit employees.

These temporary changes, such as the PSLF waiver and one-time account adjustment, offered a unique chance for nonprofit employees to gain retroactive credit toward PSLF — even if they didn’t meet typical requirements in the past.

Here’s how these changes might benefit you:

• PSLF Waiver: Under this waiver, borrowers could receive credit for past payments on any repayment plan, even if it wasn’t a qualified plan for PSLF. This meant that nonprofit employees who were on a non-qualifying plan or who had Federal Family Education Loans (FFEL), for instance, could retroactively gain PSLF credit. You can find all the details of this waiver in the Limited PSLF Waiver Guide.

• One-Time Account Adjustment: As part of this adjustment, borrowers received credit toward PSLF for periods spent in deferment or forbearance and for any student loan repayment history, regardless of the repayment plan or loan type. This adjustment has been especially helpful for those who experienced financial hardship or periods without qualified payments.

These temporary provisions are nearing their end, and all borrowers are expected to receive their retroactive PSLF credits by 2025.

If you’re a nonprofit employee who hasn’t yet applied for PSLF, you may already have significant credit toward forgiveness thanks to these pandemic-era adjustments—even if your loans were in deferment, forbearance, or under a non-qualifying plan.

Yes, religious organizations that qualify as 501(c)(3) tax-exempt nonprofits can be eligible for PSLF. Recent updates mean that hours spent on religious instruction, worship, and similar activities now count toward the full-time requirement for loan forgiveness.

This ensures that employees of religious organizations are on equal footing with those in secular nonprofits. For more details on PSLF eligibility for religious roles, see our article Do Churches Qualify for PSLF?

Before applying for the PSLF program, you’ll want to confirm that your nonprofit employer qualifies. Use the PSLF Help Tool on the Federal Student Aid website (StudentAid.gov) to check if your organization is eligible.

To verify:

1. Access the PSLF Help Tool and enter your employer’s name or Employer Identification Number (EIN) to check its PSLF status.

2. Consult with your HR department if you’re unsure about your organization’s eligibility or need further clarification.

Once you’ve confirmed eligibility, you’re ready to take the next steps toward applying for PSLF.

If you’ve verified that your nonprofit employer qualifies for PSLF, follow these steps to apply and ensure you stay on track toward forgiveness:

1. Verify Your Loan Type: Only Federal Student Loans qualify for PSLF. Ensure you have Federal Direct Loans or, if you have FFEL Loans, consolidate them into a Direct Consolidation Loan. Note: Private student loans are not eligible for PSLF.

2. Enroll in a Qualifying Repayment Plan: You need to be on a qualifying plan, typically an Income-driven Repayment plan such as IBR. These plans calculate your monthly payment based on income, helping student loan borrowers manage payments while progressing toward forgiveness.

3. Submit Your PSLF Form Annually: File a PSLF Form (sometimes called the PSLF application) each year and whenever you change employers to track your qualifying employment. This form confirms your progress toward the 120 payments required for PSLF.

4. Monitor Your Progress and Make On-Time Payments: PSLF requires 120 qualifying payments while working full-time for an eligible employer. Use the PSLF Help Tool on StudentAid.gov to check your status regularly and ensure payments are on track.

5. Stay in Touch with PSLF Team: Your loan servicer—i.e., Aidvantage, EdFinancial, MOHELA, and Nelnet—aren’t directly involved in managing your PSLF progress. That job is handled by FSA’s PSLF Team. You can call them at 1-888-303-7818 to check your status. You can also log into your account at StudentAid.gov to view your PSLF progress.

Not every nonprofit organization is an eligible employer for PSLF, but there are still other forgiveness options to explore if your employer doesn’t qualify.

Here are a few alternative programs that may help you manage your student loan debt or work toward forgiveness:

1. IDR Forgiveness: IDR plans, such as Pay As You Earn and Income-Based Repayment, adjust your monthly payments based on your income and family size. After 20 or 25 years of qualifying payments, depending on the plan, any remaining balance may be forgiven. This can be an option if you’re working for a non-qualifying employer but need a pathway to eventual forgiveness.

2. Perkins Loan Cancellation: For borrowers with Perkins Loans, there are unique cancellation options based on your occupation. Teachers, nurses, and certain public service professionals can have a portion or all of their Perkins Loan debt canceled over time.

3. Teacher Loan Forgiveness: If you work in a low-income school or educational service agency, you may qualify for Teacher Loan Forgiveness. This program offers up to $17,500 in forgiveness for qualifying teachers in specific subjects. This option can be beneficial for those who do not qualify for PSLF but meet other criteria. Related: Student Loan Forgiveness For Professors

For a complete guide on these and other forgiveness programs, check out our article on How to Apply for Student Loan Forgiveness.

The main student loan forgiveness option for nonprofit employees is PSLF, which offers the potential to erase federal student loan debt after specific requirements are met.

These include ensuring employer eligibility, enrolling in an appropriate repayment plan, and making timely monthly payments. Each step helps ensure progress and keeps you on track for loan forgiveness.

If you need help verifying eligibility, understanding PSLF requirements, or getting personalized guidance for unique loan situations, our team is here to support you.

Book a call with us to get expert guidance on your path to student loan forgiveness.