Efforts have been stepped-up to spread awareness among at least 100,000, 10-year nonprofit employees that an Oct. 31 deadline is looming for them to potentially clear remaining student loan debt from their budgets.
Some nonprofits – and other public service organizations including hospitals, universities and healthcare centers – have hired firms to assist employees with reducing monthly student loan debt payments and determine eligibility for loan forgiveness.
The Public Service Loan Forgiveness Program (PSLF), administered by the U.S. Department of Education (USDoE), was created under the College Cost Reduction and Access Act (CARES) of 2007. The plan was to incentivize people to work in the nonprofit or public service jobs and have their student loan debt cleared after fulfilling a certain number of years of service.
Full-time nonprofit sector workers had to put in 10 years of full-time service beginning with the year 2007, meaning they would be eligible for student loan debt clearance by 2017. The USDoE has identified an estimated 100,000 nonprofit and public service employees who likely, collectively, qualify for about $6.2 billion in student loan debt forgiveness.
United Way Worldwide in Alexandria, Va., for example, has contracted with the social impact technology company Savi, of Washington, D.C., to offer a program on its website for consumers and employees to input student loan and work history data to determine if they are eligible for relief.
The National Council of Nonprofits (NCN), acknowledging that some nonprofit managers are lackadaisical about informing employees of student loan debt eligibility, has held webinars with the Student Borrower Protection Center to spread the word. Rick Cohen, the NCN’s chief operating officer, said he has seen some student loan debt forgiveness mentioned as a benefit at nonprofits in online job postings but managers are not required to educate employees about the federal program.
“It’s one more employment offering for nonprofits but they have no obligation to tell employees. If they did, it would be among 100 other things to go over. Still, we are seeing some nonprofits use (student loan forgiveness) as they struggle to hire and retain staff,” Cohen said.
Before the onset of the COVID-19 pandemic, tax-exempt organizations accounted for at least 12.5 million jobs. An estimated 1.64 million of those jobs were lost to the pandemic, reducing the nonprofit workforce by 13.2% as of May 2020, according to the Johns Hopkins Center for Civil Society Studies, which recently ceased operation after the death of its leader, Lester Salamon, Ph.D.
The industry has seen gains during the past two years but the nonprofit workforce is still down about 250,000 jobs, said Cohen.
Participation in PSLF has not been great. Even the USDoE ultimately admitted the program failed, publicly acknowledging in 2021 that only 16,000 eligible people had been approved for debt clearance in four years because of confusing and rigid application rules. The USDoE then offered a lifeline by instituting a one-year waiver period that expires Oct. 31, for nonprofit employees and other public service workers to apply or re-apply for debt forgiveness with the original rules set aside.
Lindsay Clark, Savi’s director of external affairs, urged nonprofit managers to let their employees know they should act immediately. “We’ve found there’s a lack of awareness about the waiver program. It’s a once-in-a-lifetime opportunity and some people could be sitting on full forgiveness,” Clark said.
A federal, overall moratorium was imposed in March 2020 on all student loan repayments and after six extensions is set to expire this Aug. 31. Clark said eligible nonprofit and other public service workers among the nation’s 27 million student loan borrowers might also not be thinking about applying for the debt clearance because they haven’t had to repay student loans for the past 28 months.
According to information in announcements by the USDoE, “These changes are important steps toward a better and stronger PSLF program, one that will move away from the current situation in which too few borrowers receive forgiveness, and too many do not receive credit for years of payments they made because of complicated eligibility rules, servicing errors or other technicalities.”
Nonprofit workers who have accrued 10 years of service, even at multiple nonprofits, can apply for relief using the USDOE’s PSLF Help Tool, available at StudentAid.gov/PSLF.
Savi has partnered with the Manhattan-based TIAA (Teachers Insurance and Annuity Association of America) to provide debt management solutions and assistance with navigating the PSLF application process to employees of more than 100 nonprofit, hospital and university systems. Elizabeth Anderson, senior director of public relations for TIAA, said nearly 6,000 nonprofit employees have been helped with PSLF, with the average projected forgiveness to be more than $50,000 per worker.
Among the changes to PSLF offered under the temporary waiver:
- Borrowers can count payments from all federal loan programs or repayment plans toward forgiveness. Only Direct Loans, those given by the USDoE, were previously accepted.
- Borrowers with Direct Loans, those who have consolidated all other loans into their Direct Loan, and those with other types of federal student loans who submit a consolidation application into the Direct Loan program before the waiver expires are eligible.
- Applicants will get credit for every month they worked for a nonprofit during the moratorium period even though they didn’t have to pay the monthly loan.
- Borrowers who might have missed a payment or paid a reduced student loan amount in their 10-year nonprofit work history can still receive credits toward PSLF. (Some borrowers with loans through the Federal Family Education Loan program reported receiving wrong information from services about how to progress toward PSLF, according to the USDoE.)
- Borrowers must submit a PSLF form, the single application used for employment certification review, payment counts and processing of forgiveness by Oct. 31.
- Previously denied PSLF applications will be reviewed and errors corrected, according to the USDoE calling errors “a particularly worrisome barrier to PSLF access. (PHEAA, the student loan servicer that had processed PSLF payments, entered into a settlement with the Massachusetts Attorney General to review applications for errors. Accounts now are being processed by a new servicer.)
Nonprofit workers who have accrued 10 years of service, even at multiple nonprofits, can apply for relief using the USDOE’s PSLF Help Tool, available at StudentAid.gov/PSLF