Pandemic adds one more hurdle to nonprofit student loan forgiveness

Photo: Student loan forgiveness request and reminder note through Marc Verch under Creative Commons 2.0

December 9, 2020; Market

As NPQ As noted earlier, eligibility for the public student loan exemption has never been easy. But now, accumulating the required 120 payments has become much more difficult. The reason: the disappearance of many non-profit jobs.

In September 2020, there were 976,620 fewer nonprofit jobs in the United States than in February before the COVID-19 pandemic. This is down from the peak loss of 1.6 million nonprofit jobs spring up, but that’s still a huge number. The Johns Hopkins Center of Civil Society Studies discovered that most of the jobs lost are in health and social services. Many former nonprofit workers also have outstanding student loans. The burden is great; 58 percent of people with student loans owe more than $ 50,000.

During the pandemic, as of October 7, 2020, less than 11 percent of those with unpaid federal student loans were making payments on them. (This translates to about 4.6 million of the 42 million federal student borrowers. This is in part due to the federal coronavirus forbearance program for student loans, which earlier on Dec. 4e has been extended for an additional month until January 31, 2021. Some people take advantage of the break on all federal student loans to free up money for other expenses. But others have become unemployed and cannot pay.

For those who have remained in a nonprofit job that qualifies under the Public Student Loan Exemption Guidelines (PSLF), even if they have not paid anything in the last nine months of pandemic forbearance , these months count towards their 120 required payments. However, being unemployed in government or nonprofit means that participation in the PSLF program is also on hiatus. Participants must be working full time to be eligible for the PSLF, and a TIAA investigation found that nearly 25% of student loan borrowers who worked in nonprofits or the public service experienced significant changes in their jobs during the pandemic, including reduced hours.

The non-profit news agency Market give an example. Christopher Gaunya, a 58-year-old man who was an acupuncturist at a nonprofit hospital in Hartford, Connecticut, had been paying his student loans for seven years. It has been over 20 years since he completed his acupuncture studies. Meanwhile, although he was paying regularly, an eight percent interest rate took his original loan of $ 65,000 to a high of $ 140,000.

When Gaunya got a full time job at the hospital he thought, “OK, now we’re driving, I can really get this debt under control. I can just work hard for the next 10 years… pay off my debt and still be able to build a retirement.

“Then, of course, COVID hit,” Gaunya said. “And it all went out the window. When I lost my job it was my first thought, “Oh, my God, I’m so fucked up on my student loans. “

Fortunately, the 120 payments required to obtain forgiveness do not need to be ten consecutive years. For those who have lost their jobs, the PSLF is blocked. Participants can pick up where they left off if they get another skilled job. That’s a big “if”, however.

“Unfortunately, for acupuncturists, there aren’t a lot of jobs available with employers,” Gaunya says. “Mostly non-profit. “

There are other avenues for loan cancellation. For example, federal undergraduate loans under income-based repayment plans can be canceled after 20 years. But don’t underestimate the downsides: debt levels continue to generate interest and, unlike the PSLF advantage of tax free rebate, the amount that is ultimately written off after making payments on income-based repayment plans will be taxed. — Marian Conway

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