What To Do When You're Working for a Nonprofit and Have Student Loans

Working for a nonprofit can be a fulfilling career. You earn money and get to help people or work toward an inspiring vision.

Unfortunately, most nonprofit work has a reputation for low pay. Some would-be nonprofit employees don’t feel like they can manage their student loans on top of all their other bills. 

However, there are some ways you can manage your student loan debt when you work for a nonprofit. Here’s what you need to know about working for a nonprofit and student loans.

Working for a nonprofit and student loans: your options

Whether you’re working as a public school teacher in a low-income area or working for an organization that deals with food insecurity, you have options for handling student loans if you’re a nonprofit employee.

Public Service Loan Forgiveness

Public Service Loan Forgiveness (PSLF) provides you with a way to have your remaining student loan debt balance forgiven after making 120 qualifying payments while working for an eligible employer. That employer can be a nonprofit charity, a government organization or some other qualifying workplace. 

However, to be effective at using PSLF to manage your student loans, it helps to use an income-driven repayment plan. Because PSLF requires a minimum of 10 years of qualified employment, if you make payments under the standard repayment plan, you will have your loans paid off anyway. As a nonprofit worker, though, you probably have a low enough income to qualify for income-driven repayment.

With income-driven repayment, your payments are capped at a percentage of your income. They are lower, so you will still have a student loan balance at the end of your 120 qualifying payments. That balance can then be forgiven.

If you’re willing to work for a nonprofit for that long, you can benefit by having manageable student loan payments and getting your remaining balance forgiven at the end of 10 years. It’s important to note that private loans aren’t eligible for PSLF.

Finally, you don’t have to work for the same nonprofit for your entire 120 qualifying payments. If you switch nonprofits, you still can qualify. Make sure to fill out the employment certification each year so the Department of Education has a record of your qualifying payments. That also can help them track you through different employers.

Other loan forgiveness programs

There are other loan forgiveness programs aimed at those who choose low-paying careers traditionally. For example, Teacher Loan Forgiveness can help you receive forgiveness for up to $17,500 in student loans — and the time commitment is five years instead of 10. You also likely can qualify for income-driven repayment as a teacher.

You also might benefit from forgiveness programs aimed at those who work in health care services in underserved areas. Check with the National Health Service Corps to find out what programs you might qualify for.

Volunteer opportunities

Working with the Peace Corps or AmeriCorps can count toward your PSLF. Additionally, depending on the type of federal loans you have, you might be able to get a stipend you can use to pay down these loans. Using these volunteer opportunities can be a way to test your nonprofit work and reduce some of your student debt.

Refinancing

Another option when you work for a nonprofit and have student loans is to refinance your debt. This can be especially useful if you have private student loans. Most forgiveness programs and income-driven repayment plans are available only for federal student loans. 

For private student loans, refinancing with an organization such as Juno can help you get lower payments and even save money on interest over time. Juno negotiates rates and deals with lenders so you can benefit. If you have good credit, you might be able to compare offers. A lower interest rate saves you money over time and provides you with a payment that’s easier to manage on a nonprofit salary.

It’s also possible to refinance your federal student loans. However, even though you might get a lower payment and save money on interest, you lose access to federal programs such as PSLF and income-driven repayment. If you decide to stick with nonprofit work for the long haul, it might make more sense to just stick it out with income-driven repayment and apply for PSLF after you’ve made the qualifying payments.

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Should you work for a nonprofit when you have student loans?

When considering whether to work for a nonprofit while you have student loans, it’s essential to weigh the consequences of taking on such a job. While it can be meaningful and fulfilling to work for a nonprofit organization, there are also risks.

Risks of working for a nonprofit

• Funding might be contingent on a grant. If you work for a charity or another similar nonprofit, your position could disappear if a grant isn’t renewed. That could mean job hunting again.
• Low pay. Even with perks such as PSLF and income-driven repayment, you might not be able to live on the money you make from a nonprofit, especially if you want to have kids or if you have a partner who relies on your income.
• Burnout. Many nonprofit employees experience burnout because the hours are often long and the situations they deal with can be difficult and emotionally draining.

If you decide that working for a nonprofit is the right move for you, the next step is figuring out how you’ll manage these risks while making sure you can handle your student loans.

Another option is to look into loan forgiveness programs that have fewer requirements than PSLF. That way, you can do meaningful work for a few years and then quit before burnout sets in. 

Bottom line

Working for a nonprofit can be rewarding emotionally and provide you with a sense of purpose, but it rarely pays well. Looking into different ways to manage your student loans when working at a nonprofit can help you stay on top of payments and potentially be rewarded with loan forgiveness.