How to Obtain Loan Forgiveness on a Student Loan if You Work in the Nonprofit Sector

Repaying student loans can be difficult if you earn a low salary in a non-profit job. The federal government offers partial loan forgiveness for borrowers who work in public service occupations for at least 10 years while making payments on their federal student loans. This program is only for federal student loans, such as Stafford, Perkins and PLUS loans; it is not applicable for student loans from private lenders. The amount of loan forgiveness is equal to the balance on your federal loan after making the required 120 monthly payments while working a public service job.

Step 1

Consolidate your student loans into a Direct Consolidation Loan unless they are already all Direct Loans through the federal government. Older loans through the FFEL program must be consolidated into a Direct Loan to be eligible for public service loan forgiveness.

Step 2

Sign up for the Income-Based Repayment Plan, Income-Contingent Repayment Plan or the standard 10-year repayment plan.

Step 3

Make 120 monthly payments on your student loan after October 2007. Each payment must be within 15 days of the due date. Your last payment cannot be sooner than September 2017.

Step 4

Work full-time in the non-profit sector or another public service occupation during all of the 120 months in which you are making payments.

Step 5

Apply for Public Service Loan Forgiveness by filling out the application available through the Department of Education. This application was not available as of September 2011, but it will be available by 2017 when the first round of borrowers are eligible for loan forgiveness.

Tip

Choose the repayment plan with the lowest possible monthly payment. For most borrowers, this will be the Income-Based Repayment Plan. Although you can make higher payments and still receive loan forgiveness, you will reap the most benefit if you make 120 payments of the lowest possible amount.

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