The Nonprofit Student Debt Project is a CalNonprofits initiative to educate nonprofit staff and employers, advocate for public policy changes, and engage our community on the problem of student debt and its impact on the nonprofit workforce — and what we can do about it.
Everyone has heard about the student debt crisis – more than 44.5 million people owe more than $1.5 trillion in student debt, as of August 2019, and the numbers are only growing. In California, the average debt for an individual graduating from a four-year institution is $22,785. Learn more about the scope of the student debt crisis on the Chamber of Commerce’s Student Debt Statistics website. We estimate that more than 160,000 nonprofit staff have student debt. A 2016 survey conducted by CalNonprofits confirmed that student debt is hurting recruitment, retention and diversity in the nonprofit workforce.
One important program that nonprofit employees (and those working in the public sector) should know about is the Public Service Loan Forgiveness program (PSLF). It was signed into law in 2007 by President George W Bush. Through PSLF, after a nonprofit employee makes 120 payments on a qualified repayment plan, they can qualify for loan forgiveness.
Currently, the Department of Education is only approving about 1% of the forgiveness applications. One of the main reasons is the misinformation borrowers get from loan servicing companies (like Navient, Nelnet, Great Lakes, FedLoan, and others), which is why we support AB 376: Borrower Bill of Rights. We encourage nonprofit leaders and staff to learn about the Public Service Loan Forgiveness program and make sure they are – and remain – eligible for forgiveness.
Need to understand how the Public Service Loan Forgiveness Program works? Visit www.calnonprofits.org to view their in-depth webinar where they explain the eligibility requirements.
Read their articles about student debt and what we’re doing about it in the Stanford Social Innovation Review and the Nonprofit Quarterly, Part 1 and Part 2.
Recent California legislation on student debt
AB 461, signed by Governor Brown, exempts loan forgiveness amounts from state income tax. Right now, when your student loans are forgiven though most debt relief programs the forgiven amount is taxed as income for that year. (Thankfully the Public Service Loan Forgiveness program does not have this problem.) This leaves borrowers with big tax bills right when the relief of forgiveness was supposed to help them out. AB 461 exempts the forgiven amounts from California state income tax — a small expense for the state and a big burden lifted from borrowers.
AB 38, which we supported and was signed by Governor Brown, will continue the work to ensure that student loan borrowers are given reliable information, quality customer service, and meaningful access to repayment and forgiveness programs, by further regulating student loan servicers.
This information was made available by CalNonprofits: The Voice for California’s nonprofit community