Department of Education Proposes Unlawful Overhaul of Public Service Loan Forgiveness

The U.S. Department of Education proposed a new rule on August 18 to limit which charitable nonprofits qualify as eligible employers under the Public Service Loan Forgiveness (PSLF) program.

Under PSLF, student loan borrowers who work in public service jobs – including positions with 501(c)(3) nonprofits – for 10 years while paying off their student loans are eligible to have the remainder of their federal student loans forgiven. PSLF has enabled many young professionals to afford careers in the nonprofit sector.

The proposed new rule would exclude employers – potentially including some 501(c)(3) – from being eligible employers for PSLF if they are engaged in “substantial illegal purposes.” The proposed regulations would define “substantial illegal purposes” in ways that could mean that workers at organizations providing vital support to historically marginalized communities, including LGBTQ+ and immigrant communities, would no longer qualify.

Nonprofit organizations and the public have until September 17 to submit public comments opposing efforts to politicize the PSLF program and make it more difficult for nonprofits to attract the best, most effective workforce needed to serve their local communities.

MANP and NCN oppose initiatives that would result in dividing 501(c)(3) organizations based on subject matter and philosophy. If implemented, the proposed rule change would limit the types of charitable nonprofits that can serve as qualifying employers – a change contrary to existing federal law that extends the program to all charitable nonprofit organizations, regardless of their missions or the communities they serve.

The proposed rule opens the door to this and future Administrations changing eligibility for the program based on their priorities or ideology. Without assurances that program rules will remain consistent over the long term, nonprofit professionals cannot rely on the program to make important decisions about their career path. Ultimately, the proposed rule will harm the people and communities that rely on nonprofit organizations and the essential services they provide by making it harder to attract an effective, skilled workforce. For more information on the proposed rule, read NCN’s Insights and Analysis.

Submit Public Comments Today!

NCN urges all nonprofits and advocates to use our comment guide (PDF or Word) to submit public comments by the September 17 deadline opposing the proposed overhaul of PSLF.

The comment guide includes everything you need to make your voice heard, including clear directions on how to submit your comments, points to raise in your comments, and background information on the proposed rule.

Thank you for your advocacy!