Public Service Loan Forgiveness: a benefit you can offer your staff

This guide is for small charities that want to hire and keep good people but can't pay as much as other employers. Public Service Loan Forgiveness (PSLF) is a federal program that can cancel the remaining federal student loan balance of people who work full time for qualifying employers, including 501(c)(3) charities, after years of qualifying payments. It costs your charity nothing. After reading, you'll know who can benefit, what your charity's small part is, and how to tell candidates and staff about it.

This guide explains the program for employers. Your employees should get advice about their own loans from Federal Student Aid at studentaid.gov or their loan servicer, not from you.

How PSLF works, in brief

The rules are in a federal regulation, 34 CFR 685.219. In plain words, a borrower can have their remaining balance forgiven if they:

• have eligible federal Direct Loans;
• work full time for a qualifying employer, both when they've made the required payments and when they apply; and
• make the equivalent of 120 monthly payments under a qualifying repayment plan.

The details of repayment plans and which loans count change from time to time. For example, the regulation as amended in 2026 lists the new Repayment Assistance Plan among the qualifying repayment plans. Your employees should check studentaid.gov.

Is your charity a qualifying employer?

The regulation lists several kinds of qualifying employer. One is "an organization under Section 501(c)(3) of the Internal Revenue Code" that is exempt from tax. Government agencies and certain other nonprofits that provide public services also qualify. Labor unions, partisan political organizations and businesses organized for profit do not.

So if your charity has its IRS determination letter as a 501(c)(3) and keeps its exemption, its employees' work can generally count. A fiscally sponsored project's staff are usually employed by the sponsor, so it's the sponsor's status that matters.

Who counts as full time

The regulation defines full time as working in qualifying employment, in one or more jobs, for "a minimum average of 30 hours per week" during the period being certified. There are special rules for teachers and others on contracts of at least eight months a year.

That means a part-time employee who works 30 or more hours a week on average can count, and someone who works two qualifying part-time jobs that add up to 30 hours can too. Volunteers don't count, because they aren't employed.

Your charity's part: certifying employment

The employer's job is small but important. The regulation has the borrower apply on a form approved by the Department of Education, with a certification of employment from the qualifying employer. When an employee asks, someone authorized at your charity confirms facts such as:

• the period the employee worked for you; and
• whether they worked full time during that period.

Pick one person, such as the director or treasurer, to handle these requests, and answer them promptly. Keep payroll and time records, so you can confirm dates and hours accurately. Our personnel policies template includes timekeeping and pay records.

Telling candidates and staff

PSLF can be a real draw for people with student loans, such as social workers, teachers, counselors and nurses.

• In job postings, you can say: "As a 501(c)(3) employer, [NAME] is a qualifying employer for the federal Public Service Loan Forgiveness program." Don't promise that anyone's loans will be forgiven; that depends on their own loans and payments.
• When you hire, mention PSLF and point new staff to studentaid.gov.
• Once a year, remind staff that you'll certify employment whenever they ask.

Your PSLF checklist

• We know our charity is a 501(c)(3), and our IRS exemption is current
• We've checked studentaid.gov for the current qualifying-employer rules and form
• One person is responsible for certifying employment, promptly
• Our payroll and time records can show dates of employment and hours
• Our job postings mention PSLF without promising forgiveness
• New staff are told about PSLF and pointed to studentaid.gov
• We never certify for volunteers or contractors