By working for a nonprofit, you could enjoy a meaningful career that makes a difference in the lives of others. But your public service salary could make it tough to afford your student loan payments. Fortunately, you might be eligible for loan forgiveness if you’re working for a nonprofit and have student loans.
The Public Service Loan Forgiveness (PSLF) program could forgive your student loan balance after 10 years of public service. Let’s take a look at how this works, specifically:
- Working for a nonprofit and student loans
- Selecting the right income-driven repayment plan to pursue PSLF
- Understanding the PSLF Limited Waiver Opportunity
- How to apply for PSLF
- Other ways to get loan forgiveness if you work for a nonprofit
- Nonprofit work and private student loans
- Pros and cons of pursuing a nonprofit career
- Volunteering with a nonprofit and student loan forgiveness
- Other work arrangements and your student loans
- Deciding if PSLF is right for you
Working in the nonprofit sector offers a unique benefit to federal student loan borrowers. Under the Public Service Loan Forgiveness (PSLF) program, student loan borrowers who work full time at certain nonprofits may be eligible to get the remainder of their loans erased. Note that private student loans are unfortunately not eligible for PSLF.
Here are the conditions you must meet to qualify for the federal loan forgiveness program:
- You must have federal direct loans (though other types of loans may be eligible if they are consolidated under the Direct consolidation loan program).
- You must work full time at a nonprofit with a 501(c)(3) designation — or a government organization or another qualifying public service organization.
- You must repay your loans on an income-driven repayment plan, which caps your loan payments according to your income.
- You must make 120 qualifying student loan monthly payments while working full time for a qualifying employer, which would span at least 10 years.
Please note: Although the PSLF program sounds like a dream come true, actually getting loans erased can be difficult. Since borrowers first became eligible for forgiveness in 2017, the acceptance rate has been notoriously low.
Along with working in a nonprofit for 10 years, you must be paying back your loans on an eligible repayment plan to qualify for PSLF. Qualifying plans include the four income-driven repayment plans:
- Income-based repayment (IBR)
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
- Income-contingent repayment (ICR)
All of these plans cap your monthly payments at 10%, 15% or 20% of your discretionary income while extending your repayment terms to 20 or 25 years. Since each plan is slightly different, It’s important to think carefully about the pros and potential consequences of each one before choosing one.
Here are some factors to consider that might help you select a plan:
- IBR or PAYE may be better for those who get married or expect significant salary boosts during the repayment period, because it will base your student loan payment on your salary alone if you file taxes separately from your spouse.
- REPAYE considers the combined income for married couples, even if you file your taxes separately, which would likely result in higher monthly payments. It also doesn’t cap the monthly payment amount so salary bumps could lead to higher monthly payments than on the standard repayment plan.
- Income-contingent repayment (ICR) plans should typically be avoided when choosing an income-driven plan specifically for the PSLF program, as it can lead to higher monthly payments and result in less debt to forgive. However, ICR is the only plan available to parent PLUS borrowers, and only if you consolidate your parent PLUS loans via a Direct consolidation loan.
Read up on the details of all four income-driven repayment plans so you can figure out which one makes sense for your situation. Generally speaking, it often makes sense to opt for the plan that will give you the lowest monthly payment.
While student loan borrowers typically need to pay back their loans on an income-driven plan to qualify for PSLF, a recent piece of legislation has temporarily waived this requirement.
With the new Limited Waiver Opportunity, you could have any of your student loan payments count toward PSLF, even if you were on a typically non-qualifying plan. What’s more, the period of suspended payments during the emergency forbearance will also count toward PSLF.
To take advantage of this Limited Waiver Opportunity, you must submit an Employer Certification form before Oct. 31, 2022. If you owe any loans that are not from the Direct loan program, such as FFEL loans, then you also must consolidate them with a Direct consolidation loan before that date.
Unfortunately, parent loans are not eligible for this waiver. If you have any other type of loan, however, it’s worth taking advantage of this opportunity, as it could move you months or even years closer to receiving loan forgiveness through PSLF.
New grads working in the nonprofit sector can take the following steps to apply for the PSLF program:
- Contact your loan servicer and sign up for an income-driven repayment plan.
- Fill out the Employment Certification for Public Service Loan Forgiveness form each year (or when you change employers) and submit it to FedLoan Servicing.
- After working in the nonprofit sector for 10 years and making 120 payments, submit the PSLF application to FedLoan Servicing in order to receive loan forgiveness. Note that when FedLoan Servicing’s contract ends, a different loan servicer will handle PSLF paperwork.
- Remain working in the nonprofit world until your loan forgiveness is granted.
Submitting your Employment Certification form is especially crucial, as your loan servicer will let you know whether or not your employment qualifies for the program. If it doesn’t, it’s better to find that out sooner rather than later, so you can look for other options.
If your employment qualifies you for loan forgiveness and you fulfill all the conditions, you can get your remaining student loans forgiven. The best part? Under this program, your loans are not considered taxable income, so you won’t be hit with a hefty tax bill.
While PSLF is perhaps the most well-known path to loan forgiveness, it’s not your only option if you work in public service. There are also a few other, job-specific programs that could forgive your loans, including,
- Teacher Loan Forgiveness, which offers up to $17,500 in loan cancellation to teachers who work for five consecutive years in low-income settings and teach certain subjects.
- National Health Service Corps, which provides up to $50,000 in loan assistance for healthcare professionals who work for two years at an eligible site.
- NURSE Corps Loan Repayment program, which will pay off up to 60% of your student loans after you work for two years in an underserved community, as well as an additional 25% of your balance for a third year of service.
It’s worth exploring all your options for loan forgiveness, especially if you work in the public sector. Some of these programs offer loan cancellation a lot sooner than PSLF.
Private student loans are not eligible for federal loan forgiveness programs, but all hope is not lost. There are certain non-federal programs that might be able to help.
In fact, there are a variety of student loan repayment assistance programs that are offered by state governments, universities or private organizations. Similar to federal programs, most require that you commit to two or more years of public service.
Some common professions that qualify for loan repayment assistance include lawyers, doctors, veterinarians, teachers, dentists, nurses and pharmacists. Our comprehensive database of loan repayment assistance programs can help point you in the right direction.
It’s worth noting that some private companies also offer student loan benefits to employees. If you’re not committed to working in a nonprofit, pursuing a job with one of these companies could help you chip away at your student loan debt faster.
Working in the nonprofit field is a unique experience that varies a lot from any corporate environment. The work isn’t always glamorous, but the impact on communities can be huge. At the end of the day, you can feel good about what you are doing.
However, nonprofit work can often be taxing. Depending on the type of community you serve, you might get a front row view of injustices and sad situations.
|Pros of working for a non-profit||Cons of working for a non-profit|
|Rewarding, meaningful work||Low pay|
|Satisfaction from helping others||Exposure to a lot of sadness or injustice can take a toll on your mental and emotional health|
|Unique experience that differs from the for-profit business world||Continued employment could be tenuous/based on grant renewal|
Because of the challenges, it may be difficult to commit to the nonprofit sector for 10 years in order to achieve student loan forgiveness. Even if you feel like you can devote the next decade of your life to this work, you must understand that forgiveness under the PSLF program is far from guaranteed and may not even be the best financial strategy for you.
For instance, if your career plans change and you take a corporate job in the sixth year, the previous five years of working toward PSLF would have been in vain. In addition, switching from the standard repayment plan to an income-driven repayment plan would have extended the life of your loan, causing you to pay more in interest. And, if you don’t qualify for PSLF but ultimately have your loans forgiven under your income-driven repayment plan, that forgiven amount is typically considered taxable income the year your slate is wiped clean (though taxes on forgiven student loans have been waived until 2025).
If you’re not sure about committing to a decade-long nonprofit career, you can test-drive the experience by volunteering for an organization that could get part of your student loan balance erased. Two possible options are:
- AmeriCorps: For a year of full-time service, you could receive the equivalent of the maximum Pell Grant ($6,495 for the 2021-2022 award year) to apply to your loans.
- Peace Corps: You could be rewarded with a 15% to 70% cancellation of your federal Perkins loans, depending on length of service.
In addition, volunteering full time for AmeriCorps or Peace Corps is considered qualified employment under the PSLF program. However, since rules and benefit amounts are subject to change, it’s important to thoroughly research these volunteer opportunities before applying for them.
If you can commit to 10 years of service at a nonprofit and get your loans forgiven, it’s worth pursuing that PSLF strategy and line of work. But if you’re unable or unwilling to deal with the low pay and high demands of nonprofit work, there are other options:
- Become a consultant
- Work at a startup, with similar idealistic visions as nonprofits
- Start your own business
Not all jobs outside of the nonprofit realm are corporate. You can still make a difference while earning a solid income. Just think: If you’re making good money, you may be able to knock out your education debt in a few years instead of waiting for student loan forgiveness.
New grads working for a nonprofit with student loans should explore the Public Service Loan Forgiveness program. It can help lessen the burden of student loan debt and make your current payments more manageable. However, consider the downsides of loan forgiveness programs before proceeding.
And if you can’t commit to 10 years of service to the nonprofit world, you still have options. Ultimately, it’s important to be sure you’re ready for a decade of public service and that you understand all of the financial implications before pursuing this type of loan forgiveness.
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|1.89% – 5.90%4||Undergrad & Graduate|
|1.74% – 7.99%5||Undergrad & Graduate|
|2.05% – 5.25%6||Undergrad & Graduate|
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1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 4, 2022.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Student Loan Refinance Interest Rate Disclosure Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Let us know if you have any questions and feel free to reach out directly to our team.
3 Important Disclosures for SoFi.
Fixed rates range from 3.49% APR to 7.99% APR with a 0.25% autopay discount. Variable rates from 1.74% APR to 7.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
5 Important Disclosures for Navient.
6 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 5/17/2022 student loan refinancing rates range from 2.05% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.93% Fixed APR with AutoPay.
7 Important Disclosures for PenFed.
Fixed Rate Loan Terms: 5 years/60 monthly payments, 8 years/96 monthly payments, 12 years/144 monthly payments or 15 years/180 monthly payments. Annual Percentage Rate is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed rates range from 3.29% to 5.43% APR. Rates are subject to change without notice. Fixed APR: Fixed rates will not change during the term. This rate is expressed as an APR. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
8 Important Disclosures for Citizens.
Education Refinance Loan Rate Disclosure: Variable interest rates range from 1.99%-8.38% (1.99%-8.38% APR). Fixed interest rates range from 2.99%-8.63% (2.99%-8.63% APR).
IS Variable Rate Disclosure: Variable Rates advertised are based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of December 1, 2021, the one-month LIBOR rate is 0.09%. Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree and presence of a co-signer. Your final variable rate may be based upon the 30-day average SOFR index, as published by the Federal Reserve Bank of New York. The maximum variable rate is the greater of 21.00% or Prime Rate plus 9.00%.
ERL Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of May 1, 2022, the 30-day average SOFR index is 0.29%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the prime rate plus 9.00%.
Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.
Lowest Rate Disclosure: Lowest rates are only available for the most creditworthy applicants, require a 5-year repayment term, immediate repayment, a graduate or medical degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer. Borrowers should carefully review federal benefits, especially if they work in public service, are in the military, are considering possible loan forgiveness options, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision on our website including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.