October 19, 2021

What Types of Nonprofits Qualify for Student Loan Forgiveness?

Forgiveness

Nonprofit student loan forgiveness is possible with the Public Service Loan Forgiveness (PSLF) Program. Qualified nonprofits include tax-exempt organizations under section 501(c)(3) of the Internal Revenue Code, according to the Internal Revenue Service IRS.

Meanwhile, organizations that primarily provide a qualifying public service also qualify for the PSLF program even if they are not tax-exempt under the IRS’s section 501(c)(3). Still, there are limitations in qualifying for PSLF. Be sure to confirm the tax status of the place of your employment to determine your eligibility for student loan forgiveness.

Qualifying Public Services for Non-Tax-Exempt Organizations

You may qualify for PSLF if your nonprofit employer offers specific public services but is not tax-exempt under section 501(c)(3) of the IRS. Confirm if your employer provides at least one of these public services:

  • Emergency Management: Organizations that deal with the humanitarian aspects of emergencies such as flash floods, hurricanes, and wildfires.
  • Military Service: Organizations that offer services on behalf of the U.S. armed forces or the National Guard.
  • Public Safety: Organizations that provide ambulance, crime-fighting, firefighting, or similar assistance and services.
  • Law Enforcement: Organizations that enforce criminal law for crime prevention, control, or reduction.
  • Public Interest Law Services: Organizations offering legal services and are funded partially or fully by a local, state, federal, or tribal government.
  • Early Childhood Education: Educational organizations that may offer services such as licensed or regulated child care, Head Start, and state-funded prekindergarten.
  • Special Public Service: Organizations dedicated to assisting individuals with disabilities and the elderly.
  • Public Health: Organizations that employ nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in healthcare practitioner occupations, according to Gov. Other qualifying employees include counselors, social workers, and those in health support occupations. The Bureau of Labor Statistics defines the terms associated with community and social service specialist occupations.
  • Public Library Services: Organizations that offer library services where the general public can read books, access the internet, use study areas, consult reference materials, and print or photocopy documents without being a member.
  • School-Based Services: Organizations that offer school-based services such as cafeteria or library services.

Exemptions and Limitations

Your primary employer can tell you about its tax status and if it is a nonprofit organization. Generally, eligible nonprofits include most private elementary and secondary schools, as well as private colleges and universities.

However, organizations that are labor unions or partisan political organizations are ineligible PSLF employers. In addition, you may have limits on your PSLF qualifications if your job nature involves religious activities.

Be sure to confirm your organization’s type and tax status to determine your PSLF eligibility. Or, you can use the Chipper's Nonprofit Organization Search tool to find information about your organization.

Conclusion: What Types of Nonprofits Qualify for Student Loan Forgiveness?

Qualifying nonprofits for PSLF are organizations that are tax-exempt under section 501(c)(3) of the Internal Revenue Code. Some organizations that are not tax-exempt may still qualify if their operations involve qualified public services.

You can confirm the tax status of the organization you work for with your employer. Or, you can search the IRS’s database to confirm this detail yourself.

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