Written By Kevin Payne
Public Service Loan Forgiveness (PSLF) offers tax-free loan forgiveness on federal student loans after 10 years of payments while working full-time at a qualifying employer. If you meet this requirement, you can knock out considerable student loan debt. However, if you volunteer full-time, getting loan forgiveness isn’t as straightforward.
To qualify for PSLF, you must work full-time for a nonprofit or government employer. In almost all cases, the answer is no — volunteer work doesn't count toward PSLF — but there are a couple of exceptions to this rule. This doesn't mean you can't qualify for loan forgiveness or receive help paying off your student loans through other programs. Keep reading to learn more about volunteer work and PSLF requirements.
Does volunteering count for PSLF?
Almost no volunteer work counts toward the U.S. Department of Education's requirements to receive forgiveness through Public Service Loan Forgiveness. The program is specifically designed to forgive loan debt for W-2 employees in the public sector working for eligible nonprofit organizations and government agencies. To qualify for PSLF, you must:
- Make 120 qualifying payments
- Make payments under an income-driven repayment (IDR) plan
- Be employed full-time
- Have federal Direct Loans
In most situations, volunteer hours don’t count toward PSLF requirements because you’re not classified as an employee. The only exceptions are hours served through the AmeriCorps or Peace Corps, which are both federal government agencies.
The Department of Education considers volunteer work with AmeriCorps or Peace Corps the equivalent of public-service work under PSLF requirements.
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How to lower student loan payments while volunteering
Paying off student loans is challenging, especially when working as a volunteer. Whether you volunteer full- or part-time, not generating income can create issues with affording student loan payments. Luckily, there are ways for volunteers to lower their student loan payments to make them more manageable.
For federal student loans
For federal borrowers, you can apply for an IDR plan. There are four IDR plans available:
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
- Pay As You Earn (PAYE)
- Saving on a Valuable Education (SAVE), formerly called REPAYE
Each IDR plan carries its own repayment structure, but all four plans create student loan payments based on a percentage of your income. Payments typically are lower than what you’d pay on a standard 10-year repayment plan. As a volunteer who doesn’t earn an income, your payments could be as low as $0 per month during your service.
For private student loans
If you have private student loans, you can refinance them to a lower interest rate and terms. Refinancing can help lower your monthly payments. Keep in mind that you'll need to meet the lender’s credit and income requirements to qualify for refinancing.
Lenders set rates based on your creditworthiness. Shop around to find the best rates. Many lenders allow you to check rates before applying through a soft credit pull, which won't impact your credit score.
You can also refinance federal student loans, but it's probably not the best repayment path right now with the extension of the federal student loan payment pause and a 0% interest rate for all federal student loans.
Also, when you refinance federal student loans, they become private student loans, resulting in lost access to federal protections like loan forgiveness, forbearance and loan deferment.
Volunteer opportunities to consider
Time spent volunteering with the Peace Corps or AmeriCorps can count toward PSLF employment requirements. These volunteer hours might also qualify you for other types of federal loan forgiveness or loan cancellation. Here’s what to know about earning forgiveness or cancellation under each volunteer opportunity.
Peace Corps
The Peace Corps is considered a qualifying employer for PSLF standards. Since PSLF requires working full-time for 10 years while making payments, unless you volunteer for Peace Corps for a decade, you'll need to pair your volunteer service with other eligible work to reach PSLF’s employment requirements.
Peace Corps volunteers with federal Perkins Loans might get up to 70% of their student loan debt wiped out through Perkins Loan cancellation. The program features tier-cancellation rates based on years of service:
- 15% forgiveness of Perkins Loans for each of the first two years of service.
- 20% cancellation of Perkins Loans for the third and fourth year of service.
Read more about Perkins loan cancellation.
AmeriCorps
AmeriCorps is also considered a qualifying employer through PSLF. The same requirements apply as with the Peace Corps or other qualifying employers.
AmeriCorps VISTA volunteers might also qualify for loan cancellation up to 70% if they took out Perkins Loans to pay for school.
Another way AmeriCorps volunteers can receive help paying off student loans is through the Segal AmeriCorps Education Award. Qualified applicants that have completed AmeriCorps service requirements and enrolled in the National Service Trust might qualify for the award. Awards can be used to repay select federal student loans or pay for current educational expenses.
Why you shouldn’t take a job just for PSLF
Public Service Loan Forgiveness is a great option for those who qualify, but you shouldn't build a career based on whether it can earn you forgiveness. Through other loan repayment options, you can pursue the career you want while still qualifying for forgiveness.
IDR forgiveness, for example, is available to most federal student loan borrowers. It offers loan forgiveness after 20 to 25 years of qualifying payments on an income-driven repayment plan. Unlike PSLF, however, these forgiven amounts are considered taxable income.
If you don't qualify for forgiveness, you can always refinance your student loans to a lower interest rate. If you have good credit, you could score a much lower rate than you're paying now, potentially saving thousands of dollars in interest over your repayment period.
Figuring out the best step along your repayment journey can be challenging and nuanced. Our student loan consultants have helped thousands of borrowers save tens of thousands of dollars through customized repayment plans, with or without loan forgiveness. Schedule a student loan consultation to get a customized repayment strategy.
Not sure what to do with your student loans?
Take our 11 question quiz to get a personalized recommendation for 2024 on whether you should pursue PSLF, Biden’s New IDR plan, or refinancing (including the one lender we think could give you the best rate).
