Nonprofit Employers FAQs

What is Public Service Loan Forgiveness?

This federal program from the Department of Education helps nonprofit staff with student debt to stay in the sector by forgiving the balance of their student loans after 10 years of payments, as long as they are employed by a nonprofit while they are making payments. Go here for an overview of this program and information on who is eligible.

Why should our organization create a support program for employees with student debt?

Creating a support program for employees can help you recruit and retain diverse, committed staff members. Promoting the Public Service Loan Forgiveness program (a cost-neutral tool) can help you:

• Boost staff morale by showing that you care about a deeply troubling issue
• Retain employees by educating them about the program and actively supporting their forgiveness applications
• Recruit the best and most diverse candidates by offering a program that for-profits can’t, appealing to candidates’ hearts (their desire to work for the community) AND their heads (their desire to be debt free in a reasonable amount of time)

What are some of our options for supporting staff with student debt?

• Make sure your staff know about – and stay eligible for – Public Service Loan Forgiveness. 
• Host information sessions or private consultations with student debt experts. Contact CalNonprofits or Student Debt Crisis (www.studentdebtcrisis.org) to discuss what would work best for you.
• Provide tuition reimbursement for education related to the employee’s job, while the person is employed by your organization. This could include helping pay for additional certifications, continuing education, or advanced degrees.
• Provide cash repayment assistance. Your board and management team can create any version of a cash benefit plan that fits your organization’s budget and values.
• If we offer a cash benefit will the employee have to pay income tax on it? Yes. At the moment there isn’t a pre-tax deduction or other tax-free way to give employees money toward student debt payments. For-profit companies can deduct the cash benefits from the income tax they pay to the IRS, but since nonprofits don’t pay income tax, that benefit does not apply.
• Team up with financial institutions to help staff with private loans get “refinanced.” Because private loans are not eligible for forgiveness, you can support those employees by asking your bank or local credit union if they have staff willing to advise borrowers with private loans on their options.

How do we know if our employees have student debt?

There are a number of options for figuring out if a support program would be helpful: you can ask employees for their input, you can conduct an anonymous survey, or you can invite employees who want help with student debt to speak with you privately. For new employees you can provide information about your support program in their new employee packets as you do with other benefits. You can also choose to complete the Public Service Loan Forgiveness Employment Certification Form for every employee without knowing who might want it, but it’s probably a better use of your time to ask employees who want the form completed to make a request.

Are we a qualified employer?

Not all private nonprofits are qualified. 501c3 public charities are qualified employers along with most government agencies including tribal government and educational entities. Also qualified are:
• Public child or family service agency
• Tribal college or university
• Peace Corps
• AmeriCorps
If your organization does not fit those categories, you may still be qualified – please check the definition in Section 4 of the Employment Certification Form. Unfortunately, at this time labor unions, partisan political organizations, 501c4, and foreign nonprofits not operating in the US are not qualified employers.

UPDATE: Recently, the American Bar Association filed a lawsuit on behalf of lawyers working for nonprofits that were deemed qualified employers by FedLoan Servicing, but the Department of Education rejected that determination. In response to the lawsuit, the Department of Education indicated that they believe all determinations by FedLoan Servicing are "tentative" and the Department of Education may decide otherwise when considering an application for forgiveness. Experts advise that nonprofit employees proceed as if the FedLoan determinations will hold, but be aware that the courts have yet to decide (as of May 16, 2017).

How do we know if our employees are eligible?

Paid staff who work full time for the sector – your organization or a combination of nonprofit organizations – are eligible.

Does the employee have to work 40 hours per week to qualify as “full time?” What about part time employees?

An employee must meet your organization’s definition of “full time” OR the employee works average of 30 hours or more each week. Part time employees working more than one part-time job that together add up to 30 or more hours per week for qualified employers are eligible.

How do we know if our employee is working part time for another organization, and if that organization qualifies?

You don’t need to know. You complete the Employment Certification Form for the employee marking on the form that they work Part Time, and the average number of hours they work for you. The employee will get a separate Employment Certification Form from their other job(s) and submit them together.

What about our volunteers?

Volunteer hours do not count as hours worked for a nonprofit for the purposes of this program. AmeriCorps is a qualified employer, so anyone working for you through an AmeriCorps program will be eligible.

What do we need to do as employers?

You need to complete and sign the 2-page form with a few basic questions about your organization called the Employment Certification Form. You can download the form online here: https://studentaid.ed.gov/sa/sites/default/files/public-service-employment-certification-form.pdf

What do we need to know in order to complete the Employment Certification Form?

• Organization’s name, EIN, address, and website
• Date the employee was hired and the date their employment ended (if the employee is still with the organization you check the box “still employed” instead of entering the end date)
• Employee’s status – either full time or part time, and the average number of hours worked each week (required for both full time and part time employees)
• The category that makes your organization a qualified employer (e.g. governmental agency, 501c3, Tribal college, etc.)
Note: The employee can complete this portion of the form and submit it to you for a signature, but it’s important to double check that they’ve answered all the questions completely and correctly.

Who signs the form?

Anyone at your organization with access to employment records can complete and sign the certification form.