Given that I work with many nonprofits, you’d think that I get a lot of questions about the US Department of Education’s Public Service Loan Forgiveness (PSLF) Program. But you would be wrong. I get zero questions about it. Crickets chirping. So here are some answers to questions that perhaps people don’t know to ask.
“Please forgive me, I know not what I do.
Please forgive me, I can’t stop loving you.
Don’t deny me, this pain I’m going through.
Please forgive me, if I need you like I do.
Please believe me, every word I say is true.
Please forgive me, I can’t stop loving you.”
It’s time to stop leaving PSLF Program money on the table.
What is the PSLF? The Public Service Loan Forgiveness (PSLF) Program came into law in 2007, and it creates a path for government employees and non-profit employees to get their student loans forgiven entirely. As may surprise nobody, some details and restrictions apply.
What’s the overall concept? For employees of a U.S. federal, state, local, or tribal government or not-for-profit organization who have Direct Loans, they can qualify for the loan forgiveness by making 120 qualifying monthly payments.
Sounds promising. How is it working? Well, it’s a work in progress. The rules have been fairly complicated. And given the 120 months of payments required, it took until 2017 for anyone to qualify for loan forgiveness. So it’s going about how you’d expect for a government-run program that’s complex and slow-moving. That said, the government says that through September 2021, more than 16,000 people have had their loans forgiven at an average of $78,000 per borrower. That’s more than $1.25 billion in forgiven loans! But it’s a tiny fraction of the estimated $132 billion in loans for the estimated 1.3 million potentially eligible borrowers.
So what can be done to improve the PSLF? Great question! You may have heard something about a global pandemic. To make it easier for borrowers to benefit from loan forgiveness, the government announced changes with an important deadline for action of October 31, 2022. The details are tough to summarize, but they will help eligible employees who meet the basic program requirements who previously might have been tripped up by a technical provision. And the impact is real, with the US Department of Education recently announcing that the number of people receiving forgiveness has now quadrupled to 70,000 with more than $5 billion in forgiven loans.
Does my valuable work for a for-profit company qualify? No, unfortunately not.
Alright fine. But does my non-profit employment qualify? If you work at a 501(c)(3) public charity, then your employment qualifies once you make 120 payments. Even if you work at another kind of non-profit, your work may qualify if it counts as a “qualifying public service.” Work at a “labor union or a partisan political organization” is not eligible for loan forgiveness under the PSLF Program.
This sounds confusing. That’s not a question, but I agree. There are some useful FAQs from the government. And there are companies working to help employers and employees figure this stuff out, such as FutureFuel where my buddy and former colleague Paul Kovarsky works.
As a nonprofit employer, how can I help my employees? As everyone knows, recruiting and retaining talented staff is incredibly difficult right now. And nonprofits can struggle when competing against for-profit salaries and benefits. But here’s a potential win for you! Learn about the PSLF Program and figure out whether your employees can benefit. The program provides tangible benefits and longevity incentives for employees. Reach out if you need help figuring this stuff out. And then reward yourself with some Bryan Adams. 👇👇👇
Disclosure: This is not an endorsement of FutureFuel. You should do your own research and make your own decisions. But this is an endorsement of Paul. He’s a good guy, and smart too. And it’s also an endorsement of Bryan Adams. Who doesn’t love Summer of ‘69?