Now that you’re done with college, it’s time to find a job. But you want more than just a paycheck — you want your work to have meaning and to make a difference in the lives of others.
If that sounds like you, a career at a nonprofit could be the perfect way to help those in need and live your purpose. The problem is, your student loan balance is a heavy burden and a public service salary could make it tricky to pay off your debt in a timely manner.
Fortunately, working for a nonprofit and having student loans can peacefully coexist, allowing you to both give back to society and manage your own financial situation, thanks to a federal program. Let’s take a look at how to achieve this — specifically:
Can student loans be forgiven if you work for a nonprofit?
How can I get my loans forgiven?
Pros and cons of pursuing a nonprofit career
Volunteering with a nonprofit and student loan forgiveness
Other work arrangements and your student loans
The short answer is yes. Here’s how you can get your federal student loans forgiven if you work for a nonprofit organization.
Working for a nonprofit and student loans
Working in the nonprofit sector offers a unique benefit to federal student loan borrowers. (Unfortunately, private student loan holders are out of luck.) 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.
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 (which likely is low at a nonprofit).
- 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. There are a lot of requirements to meet, and the acceptance rate is notoriously low.
Selecting the right income-driven repayment plan to pursue PSLF
Mark Kantrowitz, previously the publisher of Cappex.com, which connects students with colleges and scholarships, offered some advice to help you choose the right income-driven repayment plan while you pursue PSLF.
Kantrowitz recommends trying to get on the Pay As You Earn (PAYE) plan, as it can reduce your monthly payments and maximize the amount of forgiveness you receive. If you’re not eligible for PAYE, consider an income-based repayment (IBR) plan or the Revised Pay As You Earn (REPAYE) repayment plan.
Typically, you are eligible for PAYE and IBR if your student loan balance is close to or exceeds your salary. Direct loan borrowers are generally eligible for the REPAYE plan.
It’s important to think carefully about the pros and potential consequences of each plan before choosing one. Here are some points Kantrowitz made:
- IBR may be better for those who get married or expect significant salary boosts during the repayment period.
- REPAYE doesn’t cap the monthly payment amount so salary bumps could lead to higher monthly payments than on the standard repayment plan.
- REPAYE considers the combined income for married couples, even if you file your taxes separately, which would likely result in higher monthly payments.
- 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.
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.
- Remain working in the nonprofit world until your loan forgiveness is granted.
Step No. 2 is especially crucial. FedLoan Servicing 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.
Working in the nonprofit field is a unique experience that varies a lot from any corporate environment. The work isn’t 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. At some point, you may wonder if you will still have a job when grant season is over.
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 considered taxable income the year your slate is wiped clean.
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 ($6,195 for the 2019-2020 award year) to apply to your loans.
- Peace Corps: Your 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 PSLF 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.
Laura Gariepy contributed to this report.
Interested in refinancing student loans?Here are the top 9 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.89% – 6.15%1||Undergrad & Graduate|
|1.99% – 5.64%2||Undergrad & Graduate|
|3.80% – 9.36%3||Undergrad & Graduate|
|1.91% – 5.25%4||Undergrad & Graduate|
|2.25% – 6.53%5||Undergrad & Graduate|
|2.15% – 4.42%6||Undergrad & Graduate|
|1.89% – 5.90%7||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|2.00% – 5.63%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews! |
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 1, 2021.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 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% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of October 26, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 10/26/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.
4 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 02/17/2021 student loan refinancing rates range from 1.91% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.
5 Important Disclosures for SoFi.
6 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.15%-4.42% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. 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.
7 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.
8 Important Disclosures for Nelnet.
Checking your rate results in a soft credit pull, which will not affect your credit score. If you continue with your application, Nelnet Bank will request your permission to obtain your full credit report from one or more consumer reporting agencies. This is a hard credit pull and may affect your credit score.
Interest rate reduction of .25% for automatically withdrawn payments from any designated bank account (“auto debit discount”). Auto debit discount applies when full payments (including both principal and interest) are automatically drafted from a bank account. The auto debit discount will continue to apply during periods of approved forbearance or deferment if the auto debit discount was in effect at the time of receiving the forbearance or deferment. Auto debit discount will remain on the account unless (1) the automatic deduction of payments is canceled or (2) there are three consecutive automatic deductions returned for insufficient funds at any time during the term of the loan.
Request for the cosigner to be released can be made by the borrower after 24 consecutive, on-time payments (not later than 15 days after the due date) of principal and interest have been made. Borrowers in deferment or forbearance must make 24 consecutive, on-time payments after re-entering repayment to qualify for the release. The borrower must be current on their payments at the time of the cosigner release request and show the ability to assume full responsibility of the loan(s) by meeting certain credit criteria on their own at the time of the request, including, but not limited to, being a U.S. citizen or having permanent residency in the United States, being the age of majority in their permanent state of residency, providing sufficient proof of income, and having no student loans in default.
Hardship forbearance allows you to temporarily suspend payments on your loan(s) while you are experiencing financial hardship. It is offered in increments of two or three months, with a maximum of 12 months available, in aggregate, over the life of the loan. If your loan(s) are in good standing at the time of your request, you will be eligible for forbearance in increments of two monthly payments. If, at the time of your initial request, your loan(s) are considered past-due, you will be eligible for forbearance in increments of three monthly payments. Future increments of forbearance, up to a life-time maximum of 12 months, may be requested upon the completion of making a certain number of principal and interest payments. During the two- or three-month forbearance period, you will not be required to make payments; however, any unpaid interest will continue to accrue and will be capitalized (added) onto your principal balance at the end of the forbearance period. You may continue making payments in any amount without penalty during the forbearance period. Your loan repayment term will be extended by the number of months in the forbearance period.
Refinance Loan Eligibility: You must be a U.S. citizen or permanent resident alien with a valid U.S. Social Security number, and be the legal age to enter into binding contracts in your permanent state/territory of residency, or be at least 17 years of age and apply with a cosigner who is at least the age of majority in their state/territory. Non-residents can apply with an eligible cosigner who is a U.S. citizen or permanent resident alien with a valid U.S. Social Security number. The student loans you refinance must be in their grace or repayment period, and you can no longer be enrolled in school on a half-time or more basis. You must have at least $5,000 in student loans to refinance. You, or your eligible cosigner, must have an annual income of at least $36,000. Approval subject to credit review. Other credit criteria may apply.
Refinance Loan Limits:
Loan Refinancing Risks: Federal student loans include benefits that may not be offered with private student loans. Carefully review any potential benefits that may be lost by refinancing federal and private education loans, such as the loss of any remaining grace periods. To learn more about what to take into consideration when refinancing federal student loans with private education loans, click here
Selecting ‘Get Started’ results in a soft credit pull, which will not affect your credit score. If you continue with your application, Nelnet Bank will request your permission to obtain your full credit report from one or more consumer reporting agencies. This is a hard credit pull and may affect your credit score.
Fixed interest rates range from 2.99% APR (with auto debit discount) to 6.25% APR (without auto debit discount). Your interest rate will depend on your (and if applicable, your cosigner’s) credit qualifications. The fixed interest rate will remain the same for the life of the loan.
Variable interest rates range from 2.00% APR (with auto debit discount) to 5.63% APR (without auto debit discount). Your interest rate will depend on your (and if applicable, your cosigner’s) credit qualifications. Variable rates may increase after consummation. The variable interest rate is equal to the One-Month London Interbank Offered Rate (“One-Month LIBOR”) plus a margin. The One-Month LIBOR in effect for each monthly period (from the first day of the month through and including the last day of the same month) will be the highest One-Month LIBOR published in The Wall Street Journal “Money Rates” table on the twenty-fifth (25th) day (or if such day is not a business day, the next business day thereafter) of the month immediately preceding such calendar month. The Annual Percentage Rate (APR) for a variable interest rate loan will change monthly on the first day of each month if the One-Month LIBOR index changes. This may result in higher monthly payments. The current One-Month LIBOR index is 0.15% as of 5/4/2021.
The lowest interest rate for each loan type requires automatically withdrawn (“auto debit”) payments, a five-year repayment term, and the borrower making immediate principal and interest payments. Not all borrowers will receive the lowest rate. The interest rate and Annual Percentage Rate (APR) may be higher depending upon (1) the credit history of the borrower and, if applicable, the cosigner, (2) the repayment option and loan term selected, (3) the loan type selected, and (4) the highest level of education attained. If approved, applicants will be notified of the rate qualified for within the stated range.
*Checking your rate results in a soft credit pull, which will not affect your credit score. If you continue with your application, Nelnet Bank will request your permission to obtain your full credit report from one or more consumer reporting agencies. This is a hard credit pull and may affect your credit score. **Your actual savings may vary based on interest rates, outstanding balances, remaining repayment terms, and other factors.