Student Loan Forgiveness for Non-Profit Employees: PSLF Program Basics

Student Loan Forgiveness for Non-Profit Employees: PSLF Program Basics

Student Loan Forgiveness for Non-Profit Employees: PSLF Program Basics

Striving for higher education is considered an essential part of entering the workforce in the United States in this day and age. Millions of Americans go to college each year in the hopes of getting a degree, costing them thousands of dollars in loans and putting them in student loan debt. Once you finish your degree, these loans can sometimes take decades to pay off, and finding a decent-paying career right off the bat is becoming increasingly uncommon. 

In recent years, student loan debt has become a hot-button issue with debates on debt forgiveness happening throughout the political playing field. Many people entering the workforce post-college quickly learn they can’t afford to focus on much else other than their student loan payments. For those of us in the non-profit sector, things aren’t much better. Non-profit employees get paid less than the average for-profit employee, making turnover high. Luckily there is some relief for non-profit borrowers through the PSLF program. We’ll go over what the PSLF program is and who is able to benefit from it.

How Has Student Loan Debt Affected the Non-Profit Sector

It can be demoralizing to spend years in college and get a degree, only to find out you can’t make a living wage with your expertise. Since workers in the non-profit sector are often paid less than for-profit workers, it immediately becomes less appealing and not viable for many graduates to consider non-profit work at all. This means the non-profit sector takes a hit, which ultimately means the communities who need help take a hit as well. 

What is Public Service Loan Forgiveness?

PSLF is a student loan debt relief program for full time non-profit employees and public service workers. You receive a maximum of $20,000 in benefits if approved. The PSLF program came to be in 2007 during the Bush administration as part of their campaign promise to slash the cost of education. It was created as a way to give public service workers and non-profit employees debt relief and encourage people to fill those jobs. While the PSLF program won’t work for everyone, it’s still important to see if you or someone you know qualifies. 

How the PSLF Program Helps Employees With Student Loan Debt

Debt relief in all forms helps the economy first and foremost. It puts money back into the hands of people who would otherwise be stuck, in this case, paying off student loan debt for the foreseeable future. It also encourages employee retention, as part of the deal is working for a non-profit full-time. This encourages graduates to stick around for the $20,000 relief and look for jobs in the non-profit sector. When employees have a reason to stay, you’ll notice the quality of your employees improves as well. People who feel encouraged by an end goal often stick it out to see things through until the end.

How the PSLF Program Falls Short

PSLF was created to help non-profit employees and public service workers but often fails to bring that aid to those people. Most folks working in the non-profit sector don’t actually know this type of debt relief exists despite student loan aid being an appealing aspect of employment to many non-profit employees. You can’t get relief from something you don’t know about. On top of that, when people do find out about it, they won’t be able to access that relief anyway. The qualifications required to be approved by the PSLF program often don’t cover the type of loan borrowers have. In fact, the PSLF program approves less than 1% of applicants

This can be remedied, however. You can create funds and budgets within your organization to help employees pay off their student loan debt faster. Programs like this are an excellent way to encourage retention and employee appreciation. Since student loan debt forgiveness is such a sought-after program, you can get ahead of the game and provide it on your own terms without waiting for legislation to change. 

How to Qualify For the PSLF Program

The qualifications for the PSLF program are as follows:

  • Be employed full-time (30+ hours a week) by the US government or a non-profit organization.
  • Make 120 payments on your student loans. This accumulates to 10 years of payments.
  • Have direct loans or consolidated direct loans. FFEL loans are not eligible for PSLF.
  • Repay your loans under an income-driven repayment plan.

All of these are required to qualify for the PSLF program. 

How the PSLF Program Can Help the Non-Profit Sector

You can help others learn about the PSLF program through educational resources. Even though not many people get approved, some still will, so it’s important to get the word out. PSLF is a drop in the bucket when it comes to student loan debt, but it can still benefit the non-profit sector in some ways.

  • Short-term effects of the PSLF program. In the short term, you’ll see graduates who are happier as a result of their debt relief. They can worry a little less about finances since a chunk of their debt is gone and they’ll be able to pay off their debts faster. People will gain experience in the non-profit sector and learn to be comfortable in that environment, encouraging them to stay. You’ll notice morale and retention is higher with PSLF beneficiaries.
  • Long-term effects of the PSLF program. As more people learn about PSLF, your employee pool will gradually increase, giving you more opportunities to grow as an organization. The communities who benefit from non-profits will get to see the results of that growth as well. 

What are the Eligibility Requirements for the PSLF Program?

In order to be eligible for PSLF, you have to have all the qualifiers mentioned above. On top of that, you have to make sure you work for an eligible organization and that you count your 120 payments properly. The payments must be paid in full no later than 15 days after your due date with an eligible payment plan. Payments also have to be during a period where you were being billed, so you can’t count payments when you were in deferment or forbearance for example. Unfortunately, they don’t allow you to make more frequent payments to get to your 120 payments faster either. You’ll need to make sure your loans are the correct type as well.

How to Make the Public Service Loan Forgiveness Work For Your Organization

PSLF is an appealing program at first glance with a lot of potential to help encourage employment in the non-profit sector. You can use PSLF and other methods of student loan debt relief to your advantage, helping draw in prospective employees and bettering your non-profit’s mission. The requirements for PSLF can become discouraging, but it’s still important to urge people to try and apply anyway. Everyone in the non-profit sector should try to get debt relief through PSLF if they’re eligible while we inch toward debt relief for all.

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