Are you the executive director of a nonprofit organization? A human resources employee, board member, senior manager, frontline worker, or intern at a nonprofit or government entity?
Through October 31, 2022, you have an exciting opportunity to promote a government program that could provide substantial financial benefit to employees of your organization who have federal student loans, at no cost to you or your organization.
This little-known program, Public Service Loan Forgiveness (PSLF), was created by Congress in 2007 to promote public service in the government and nonprofit sectors by reducing indebtedness and the costs of higher education for borrowers. The program is open to government workers at all levels (federal, state, and local); military members; and employees of 501(c)(3) nonprofit organizations. Public service work is a big part of the economy: roughly one in four US workers are employed by a government agency, a nonprofit, or the military.
For those who qualify, PSLF can completely wipe out the balance of a borrower’s federal student loans after 10 years of qualifying monthly payments (120 payments).
Why PSLF Matters
To qualify for many nonprofit jobs, some level of higher education is required, and indeed, advanced degrees are a condition of employment at nonprofits that provide specialized services, such as legal services or health care. All this higher education can add up to a large amount of federal student loan debt for the workers in your organization.
When it created the PSLF program in 2007, Congress was concerned it would be difficult to fill government, military, and nonprofit jobs because the public and nonprofit sectors tend to pay lower salaries than the private sector. Designed to help government agencies and the nonprofit sector with worker recruitment and retention, the program passed with a strong bipartisan vote as part of a larger bill.
However, for much of its 15-year life, PSLF has been plagued with severe administrative hassles and red tape. So much so that until 2021, 98 percent of people who applied and should have received PSLF had their applications rejected. Sometimes payments were rejected because they were off by a few pennies, or the student loan servicer failed to note that the borrower worked for a qualifying nonprofit or government agency.
The program’s obstacles inspired calls for reforms to revamp the application process and make it easier to apply. In response, late last year, the Department of Education created a special “Temporary PSLF Waiver” to streamline the application process and allow borrowers to apply to receive retroactive credit for payments that previously didn’t qualify.
In its new, improved form, PSLF can also mean Pretty Substantial Loan Forgiveness. There has never been a better time to apply. The average amount forgiven is now over $63,000 per borrower.
Below are testimonies from three residents of New York State who qualified for PSLF:
- “I couldn’t believe that I was done with my student loan debt!” said Cynthia Chaldekas, a senior librarian at the New York Public Library. Cynthia, who has been in public service her entire career, had over $96,000 forgiven through the PSLF waiver.
- Albert Robinson, an associate director at Bronx Community College, had $66,000 forgiven through PSLF. “My student loans were forgiven, and I even got back some of the payments I made over the 120 [required payments]. I got my financial freedom back,” Albert said.
- Kelly Gonzalez, a nonprofit director, has been practicing public interest law for 20 years. She had $50,000 forgiven through the PSLF waiver. “I was extremely concerned that I would not qualify due to technical reasons,” Kelly told her loan counselor. “Getting my student debt forgiven has meant more financial stability for my family.”
“Getting rid of student loan debt is transformative and life changing,” said Carolina Rodriquez, director of the nonprofit, Education Debt Consumer Assistance Program (EDCAP), which provides free advice and counseling to student loan borrowers across New York State. “From a financial perspective, borrowers can finally see their higher education pay off. Now they can do what they always wanted, which is to buy a home or save for their own children’s college because they are determined to break this debt cycle.”
“Psychologically, not having this debt is truly liberating. I see it in my work all the time,” Rodriguez said. “The emotional toll from carrying this debt for decades is a lot, and the moment that it is gone it is surreal. They can’t believe it is over. I recently saw a client find out he was receiving $200,000 in forgiveness through PSLF before my eyes. His spouse was with him, and they were both in shock. To say the least, there were some tears of joy.”
How Many Qualify?
According to an analysis by the Student Borrower Protection Center (SBPC), approximately nine million people nationwide work in public service jobs and could potentially qualify for PSLF after their 10 years of service and payments. Yet only about two percent of this nine million have received loan forgiveness so far, and only 15 percent are on track to receive it. The SBPC created an interactive national map that shows how many borrowers in each state may be eligible for PSLF.
To take just four states: 824,000 federal student loan borrowers in California, 793,000 in Texas, 359,000 in Illinois, and 524,000 in New York could potentially qualify for eventual debt cancellation. Yet about 85 percent of borrowers who are eligible nationally have not completed the PSLF Employer Certification Form needed to apply for the program and receive an eligibility status determination.
“This is a once-in-a-generation opportunity for public service workers throughout the country who are struggling with their student loans,” said Winston Berkman-Breen, Policy Counsel and Deputy Director for Advocacy at SBPC. “A federal program for cancelling these debts already exists, but these short-term changes make it a lot easier for borrowers to access it. We need to make it easy for government and nonprofit employers to help deliver this opportunity to their workforces before the October 31, 2022, deadline. Let’s not leave any free money on the table.”
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PSLF could be especially helpful to nonprofit employees of color. According to the National Bureau of Economic Research, while nationwide Black people make up 12.8 percent of the total population aged 22-60, Black workers make up 14.2 percent of US public service workers in the same age range. In addition, 28.6 percent of Black college attendees and graduates hold student debt, compared with 19.8 of white attendees and graduates. In the public sector, 33.8 percent of Black workers have student loans, compared to 25.5 percent of white workers. Among public service workers, the mean student debt held by Black workers is $43,687 versus $39,535 for white workers. The median is $26,000 for Black workers versus $23,000 for white workers.
Important and Time-Sensitive—Next Steps
Assuming you have read this far, understand that you—as a nonprofit leader—are key to helping your employees and colleagues benefit from this vital, possibly life-altering program. Your action—or inaction—could make all the difference. Here are some key steps you can take today:
- Ask your organization’s HR department to send an email to employees in August, September, and October reminding them about the opportunity to apply for PSLF by October 31 of this year. Sample emails are available in SBPC’s free employer toolkit.
- Post information about the PSLF in your HR materials, bulletin board, or intranet, indicating a point of contact for certifying years of employment.
- Hold a webinar with information about the program, and/or direct employees to outside webinars or web sites where they can get more information. Such sites include the Department of Education PSLF Waiver webpage, as well as the org website, hosted by SBPC, which is also offering several live webinars with Q&A before the waiver deadline. Employees can register here. The Education Debt Consumer Assistance Program (EDCAP-NY) is also posting archived webinars on its website, www.edcapny.org/pslf.
Now, you might be saying, “I’m not in the business of student loan advice or counseling—what does this have to do with me?”
- You should already be involved, especially if you are an executive director or human resources director. Nonprofits are required to verify years and months of nonprofit employment for PSLF purposes if current or former employees request it. If a current or former employee approaches your organization to request certification of employment—please complete and sign their form! This only confirms someone’s past or present employment; it does not determine an employee’s eligibility for PSLF.
- The beauty of PSLF is that you don’t have to be an expert. You can use our sample emails and employer toolkits and refer employees to the Federal Student Aid office’s website at the Department of Education, where they can find more information.
- Your employees need your help; student loan borrowers aren’t getting the information they need to make informed choices. Student loan servicing companies—such as Navient, Great Lakes, FedLoan, and MOHELA—are key intermediaries in loan repayment. They send the bills and collect the money. But they often fail to provide information about PSLF and other options for reducing monthly payments, such as Income-Driven Repayment. Student loan servicers’ ineffective customer service practices have been documented in reports by the Consumer Financial Protection Bureau and the Government Accounting Office.
As a nonprofit, mission-driven, charitable organization, and public service employer, this is your time to shine! It’s always a good time to do right by your employees—and there is no cost to you to help people access this potentially huge benefit.
Statewide Nonprofits Must Step Up
Statewide nonprofit associations and networks are in a key position to lead on this issue. Many statewide nonprofits and other organizations have already promoted information about PSLF to their members, including CalNonprofits and Nonprofit New York. Other statewide associations are in a key position to make a difference, such as those that represent 1) hospitals and health care providers, 2) education and childcare providers, and 3) human service organizations. Those three categories represent roughly 80 percent of the nonprofit workforce.
State governments could also do more. One state that recognizes the potential value of PSLF is California. On August 8 of this year, the Campaign for California Borrowers Rights launched a statewide California Student Debt Challenge to encourage public service employers to notify employees about PSLF before the waiver deadline expires.
Governor Gavin Newsom, Attorney General Rob Bonta, and state, municipal, nonprofit, and union leaders joined together in an online news conference to announce the challenge. “The student debt crisis continues to be a barrier to our generation’s ability to achieve economic security,” said Sarah Bouabibsa, West Advocacy Manager at Young Invincibles. “In a period of unprecedented challenges exacerbated by the pandemic, opportunities such as the Public Service Loan Forgiveness Program can provide nearly a million Californians a crucial steppingstone toward financial stability. We call on nonprofit organizations, state, and local agencies, and public service employers to take the California Student Debt Challenge and provide their employees with PSLF waiver education and support so that they can take advantage of a once-in-a-generation opportunity.”
“Student debt hurts recruitment, retention, and diversity in the nonprofit workforce, and it is incumbent upon all of us in the nonprofit sector to help the estimated 160,000 nonprofit staff with loans to get out from under these burdensome debts,” said Jan Masaoka, CEO of CalNonprofits. “Borrowers need to know about the waiver before the deadline, and we’ll do all we can to support that effort.”
By taking action on this issue, nonprofits can help their employees receive the loan forgiveness Congress promised to America’s public service workers. The revamped PSLF waiver is working: so far over 175,000 additional borrowers have received $10 billion in loan forgiveness over the last 10 months.
Our goal should be to make sure that ALL borrowers in the nonprofit sector have the information they need to apply for loan forgiveness by October 31. The impact on individual borrowers and their families is potentially life changing.
It is crucial to note that the PSLF program is not a substitute for broader student debt cancellation, which NPQ reported about in July. On August 24, the Biden administration announced broad-based cancellation of $10,000 in student debt for most borrowers with annual incomes under $125,000, and up to $20,000 for borrowers who also received a Pell grant. Biden also announced a final extension of the student loan “payment pause” for federal loans until December 31, 2022. Finally, the President announced significant changes to the Income-Driven Repayment program to lower monthly payments to 5 percent of income instead of 10 percent. While many advocates were disappointed that the amount cancelled per borrower was not higher, 92 percent of borrowers with federal student loan debt are expected to receive up to $10,000 from the proposed cancellation provisions.
For more information on PSLF, visit:
- PSLF Page, US Department of Education, Federal Student Aid office
- org (sponsored by the Student Borrower Protection Center)
- PSLF Employer Toolkit
For more information on the Biden-Harris student debt relief plan, visit:
- August 24 Debt Relief Announcement
- Analysis of President Biden’s Announced Executive Order to Cancel Student Debt