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Why Starting Your Own Nonprofit for PSLF Is Not a Good Idea

You’ve never lived if you haven’t been sued, according to a popular saying. I was recently threatened with a libel lawsuit after I expressed my opinion on a federal student loan forgiveness strategy. The idea is that you can set up your own nonprofit to get access to the Public Service Loan Forgiveness (PSLF) program. In my view, starting your own nonprofit for PSLF is a sign of desperation in the world of six-figure student loan borrowers.

There are numerous reasons why I believe this approach will fail long-term for most people. You might get certified by FedLoan Servicing, the current loan servicer in charge of managing the PSLF program. However, remember that the FedLoan determination doesn’t mean that you qualify (see the ABA PSLF lawsuit).

When the government starts getting a bill for the hundreds of thousands of borrowers who qualify for PSLF, you better believe there'll be auditing for eligibility requirements. Many folks who have falsified documents or engaged in shady practices will be denied. Those who knowingly misled the government could even go to jail. After all, you promise not to commit perjury in your income-driven repayment (IDR) and PSLF certification forms that you submit annually.

This PSLF scheme is being pushed heavily in the chiropractic, naturopathic and alternative medicine communities. I think these groups are fertile ground for schemes like this because of the extremely high student debt loads these folks face with limited incomes to tackle them. In desperation, borrowers turn to anyone who claims they have an answer.

Why starting your own nonprofit for PSLF could be tax fraud

I’m not a tax attorney or CPA, and you should consult with your own professional. That said, we've advised on over $1.9 billion in student loan debt. I consider myself, at the minimum, better informed on the student loan rules than your average borrower.

One of the most common approaches to this PSLF “set up your own 501c3” scheme is to set up a nonprofit inside your own private practice as a medical professional.

The argument in favor of this strategy is that you can offer discount services for low-income or special groups such as military veterans and thus be a nonprofit. The patients who can pay full freight go in the private practice. To me, this is ridiculous.

Just because you offer lower prices to certain customers does NOT make you a 501c3 nonprofit.

It’s called price discrimination, and it’s a basic tenet of economics that private businesses do every day. Have you ever received a student discount? Maybe you’ve gone to the movies and seen the senior special on the booth?

Businesses know that certain groups of folks cannot afford to pay as much as others. If you can give special discounts to groups that are broadly diverse, then it could be legal and smart business. Instead of only getting the higher paying customers, you get business from everyone. Just because your business provides services to people in need does not mean you’re not operating in a for-profit capacity.

If you locate your nonprofit at the same address as your private business, I believe you’re asking for it. Isn't it a private benefit if you gain positive word-of-mouth referrals from these poorer patients that pay full freight? If your nonprofit assists with the costs of rent, utilities, malpractice insurance or anything else, then you’re subsidizing a private business.

Private inurement rules could make Public Service Loan Forgiveness a private benefit

IRS rules prohibit setting up and maintaining a 501c3 if the earnings go to benefit a private party. There are numerous restrictions preventing a 501c3 from doling out money and compensation to insiders.

Of course, you can set up and run your own nonprofit and take a fair salary. That’s not the issue. Rather, it’s the interaction with this not-for-profit and PSLF that could be considered a private benefit. This concept that your nonprofit is supposed to have purely charitable motives and not benefit a private party to be legal is called private inurement.

To explain this, let’s pretend that Sarah runs a naturopathic medicine private practice and has $200,000 of student debt. Sarah makes $60,000 per year. She decides to set up a 501c3 alongside her private practice to treat single expectant mothers.

Sarah sends about 60% of her patients through the 501c3 and gets paid about $20,000 per year. Her other patients go through the private practice and make up $40,000 of her earnings.

If Sarah certifies her employment for the PSLF program, she's stating that she's a full-time employee of that organization. How can she be working more than 30 hours a week and running a private practice located at the same location full-time?

Additionally, aren’t the services she provides going to her as the owner of the private practice regardless of which organization is paid? She can maintain separate bank accounts, file her forms with the IRS, and certify her credit with FedLoan for PSLF. She will probably be successful for a few years too.

However, what is the real purpose of the nonprofit? It’s to get hundreds of thousands in tax-free loan forgiveness. There’s little doubt that when PSLF happens and were Sarah successful in getting it, Sarah would shut down her 501c3.

If that’s not a private benefit, I don’t know what is.

Setting up your own nonprofit for student loan forgiveness doesn’t pass the smell test

I consulted with numerous CPAs on this strategy. All of them said they wouldn’t recommend it to their clients in any circumstance. The attorneys I consulted with said the same thing.

Remember when the Trump Tax cuts came out, and a bunch of blue states attempted to allow high-income taxpayers to make payments to charitable organizations to try and bypass the limits on state income tax deductions? It was a great idea, but it obviously was trying to circumvent the intent of the tax law, and the IRS ruled that strategy was not allowed.

Another idea was to “crack and pack” your income into service businesses and non-service businesses to take advantage of the 20% small business deduction. The IRS ruled against that too.

There are new ideas and schemes for how to avoid taxes that pop up all the time. Some stand the test of time and are entirely legitimate, like maximizing your 401(k) plan. Others eventually get stopped when enough people use them that the IRS rules on the issue. Of course, this takes time as the issue must pop up on the IRS radar, which takes numerous cases involving the same scheme to be investigated.

That’s what I believe we’re dealing with right now on the “set up your own nonprofit for PSLF” issue. The IRS has control over 501c3 status, and FedLoan has control over the PSLF certification process.

That means someone could look innocent to the IRS in setting up a 501c3 and then turn around and use that legitimate paperwork for private benefit purposes with FedLoan, which is not testing for private inurement rules for a 501c3 status like the IRS does.

It’s brilliant until someone gets caught. At some point, my bet is that the Department of Education and the IRS will communicate and make a ruling on this.

How can you certify with FedLoan that you’re a full-time employee and the employer?

Think about this for a second. You set up your own nonprofit and are executive director. You have board members who are your friends and family. Now, you must send in the PSLF certification form to FedLoan stating you’re a full-time employee at a 501c3 or government organization for PSLF. How can you be both the qualifying employer and the employee signing the form?

Perhaps you get your board to certify your employment as a workaround. But won’t it look suspicious that you’re the one who set up the organization that’s certifying your employment?

In a more obviously troubling scenario, what happens when your or your spouse’s signature is the one on the employment certification form (ECF)? What do you expect an auditor will think one day if the signatory is either you or your spouse on the PSLF form?

Something that blatant screams of fraud or, at the very least, sketchiness.

Also, the form specifically requires that you work full-time or 30 hours a week, whichever is greater. If you work less than 30 hours a week, you in no way shadow of a doubt do not qualify.

What if you certify yourself for credit where you’re not really working the required minimum hours in the office the 501c3? If you attest to this and it’s not true, that’s perjury, and you just committed a crime.

When setting up a nonprofit organization for PSLF could actually work

If you have a 501c3 organization that you set up and run full-time, my first suggestion is that you make it larger than just you. Get formal employee agreements, benefits, have additional nonprofit employees, and for goodness sakes don’t let a family member sign off on your PSLF form. In Boy Scouts, they wouldn’t even let a family member sign off a merit badge requirement.

Make sure that the primary purpose of the 501c3 is obviously charitable. As in, you don’t locate it at a private practice, it’s obviously not run for private benefit, and the leadership of the organization does not have a deep interest in the Public Service Loan Forgiveness program.

For example, if a rich 50-year-old dentist set up a nonprofit clinic with its own building and hires a bunch of young dentists to work there for 10 years serving Medicaid patients for PSLF, that might work. If you set up that organization and it’s run by a 27-year-old who’s certifying all the employment forms for his friends with PSLF, that’s more questionable.

In other words, be conservative with your PSLF strategy. If it seems sketchy, it probably is.

What to do if you’ve signed on to run your own nonprofit

If you’ve paid an organization to set up your own 501c3 so you can get PSLF, you have a decision to make.

In my opinion, these groups range from the misguided to outright scam level.

Some of these businesses even charge upwards of $5,000 for showing you how to set up your own nonprofit to qualify for PSLF. They flaunt money back guarantees. However, consider what the guarantee is worth.

If they help you get successfully certified for PSLF, it could be years until FedLoan or the Department of Education does an audit that reverses that decision. It might even take 10 years when you send in the final PSLF application that gets examined. At that point, how likely do you think it is that you’ll get your $5,000 back?

Let’s be real. An organization set up as an LLC that has paid out hundreds of thousands or millions to its owner is set up in such a way that if everyone demanded refunds, it would simply declare bankruptcy and the owner walks away scot-free.

It’s why there are so many fly by night “student debt relief” places set up in South Florida and Southern California. They’re run by guys (yes, it’s mostly men) who’d be selling some other shady product as long as the commissions were good.

If you used the services of an organization like this, I personally would request a refund while I still can. Since they offer a money back guarantee, a refusal to honor this request could alert authorities to their activity. Of course, you should give them the opportunity to give you your money back. If they refuse, I’d report them.

How to report an organization that you suspect is committing nonprofit or student loan fraud

Providing advice on student loan repayment programs and modeling different strategies you could use is a legit activity. There are services out there that I disagree with that overcharge for their work. They don’t answer any deep questions about student loans and just go over details about what the Revised Pay As You Earn REPAYE, Pay As You Earn (PAYE) and Income-Based Repayment (IBR) plans are.

Overcharging though is not a scam. It means they’re just lousy. There are also good businesses out there that compete with Student Loan Planner®. I say good for them. We need more legit people in this world full of folks who want to make a quick buck.

Giving legal and tax advice as a non-attorney or CPA and charging as much as 10% of someone’s annual income is something I personally have a problem with.

In requesting a refund, I would first just ask. If they don’t comply after a couple of attempts on your part, then you have a couple options.

If you believe that an organization is acting fraudulently to obtain tax-exempt status, then you can report them with Form 13909 from the IRS.

This form allows you to state why you believe an organization violates the private benefit rules required to run a 501c3. After all, if organizations are run for private benefit but set up as a nonprofit to compete with your business, then this is an illegal setup.

If you believe someone is running an illegitimate PSLF scam, then you can report them to the U.S. Department of Education Fraud Hotline. This number is 1-800-MIS-USED. You can also send in an online form.

Explain what’s going on and why you think a specific business is defrauding the Department of Education. If enough people do it, then the government will be sure to investigate.

Use legitimate PSLF or loan forgiveness strategies

Starting Your Own Non-Profit for PSLF

You know what’s an easier path to getting PSLF than paying thousands to set up your own not-for-profit? Joining one that is already doing something you’re passionate about.

Why pursue an aggressive strategy that may or may not work when you could choose one that will almost certainly work out? I mean working for an established 501c3 as an employee for 10 years to get PSLF.

Of course, there’s another path besides PSLF. It’s 20 to 25-year student loan forgiveness programs under the PAYE or REPAYE plans. The PSLF schemes promoting starting your own not-for-profit usually misrepresent this strategy. They say you’ll have to pay one to three times what you borrowed.

Let's look at a chiropractor earning $60,000 per year with a $200,000 loan balance with a 7% interest rate. Here’s what the real cost would be under PAYE and REPAYE in the private sector compared to refinancing over 10 years and PSLF.

starting your own non-profit for PSLF

Is PAYE and REPAYE student loan payments over 20 to 25 years more expensive than PSLF? Of course. However, the difference in present value is only about $80,000. That’s a lot. But is it enough to warrant potential legal trouble with the IRS, working in a not-for-profit when you’d prefer not to, or dealing with all the hassle?

Any of these places promising loan forgiveness better be able to model the mathematical implications of their advice. Otherwise, they need to shut up and stop spreading misinformation designed to enrich their own pockets.

Use free resources, get help if you need it and ask for refunds if you’ve been scammed

While I would love to make a plan for every reader of Student Loan Planner®, we’re not a good fit for everyone. If you want to use our free resources including our student loan calculator to self-provision, go right ahead.

There’s no minimum time to act or high-pressure sales tactics here. We also don’t offer a money back guarantee. It’s because we are professionals with certifications like the CFP, CFA, and others and we charge for our time.

If you read our stuff and realize we know what we’re talking about, then you don’t need a guarantee.

Also, we can’t guarantee there will be no changes to loan programs. We will try to provide you with a backup plan in case Plan A doesn’t work out. I believe that’s a lot more useful than deceptively telling you to come to get a refund from me in 20 years.

If you have dealt with a company you believed has scammed you, take charge of your own student loan future. Request a refund and try to figure it out on your own. If you’d rather not, we’d love to help you out as would a number of other legitimate companies. I can help you answer questions like if starting your own nonprofit for PSLF is a good idea, give us a try.

Whenever I decide to use someone’s services or not, I ask a couple of questions:

  • Is this fee way above average or out of place?
  • Does the person working with me seem primarily like a salesperson?
  • Does this sound too good to be true?
  • Are there any high-pressure tactics to pressure me into buying?

If the answer is yes to any of these questions, I avoid working with the person. I might miss out on some good people, but it’s steered me right so far.


Have you been scammed by a student loan company? Disagree with my view on using your own nonprofit to qualify for PSLF? Share your stories and opinions in the comments.

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Comments

  1. Michele November 8, 2018 at 8:06 PM
    Reply

    Hi, I’ve read through your article and I’m one of the people that has started a non profit through probably the very program you allude to. I didn’t have a for profit at the time. I started one after the non profit was started, mostly to donate space and supplies to the non profit, and so I could charge what I’m worth part of the time to people who can pay. I think in theory having a non profit operating out of a for profit location isn’t a bad thing, the nonprofit MOST DEFINITELY does not pay for the overhead of the space or any of the supplies. The for profit freely donates all that and I don’t even have plans to account for that. I am working for the non profit the 30 hours needed and the for profit gets the rest of my work hours for the week. I think there are ways to make it work, but I do have many reservations and more are stacking up as I go along. It’s not been a year yet since I started the non profit. I don’t sign off on my own employment, nor do my family or friends, it’s board members that have signed off, board members that are in compliance with the requirements for a non profit. That all been said, I am getting worried about some aspects of the starting a non profit and pslf combo. The non profit has to have money to run and until you get patients coming in you end up donating your own money, or maybe someone who knows you donates some. That’s not sustainable long term because eventually a nonprofit has to pass a public support test, which is 33 1/3% of support needs to come from either gross revenue of sales/services of the nonprofit, and only 2% of the other 66% can come from individual support. Not until year 6 does the IRS check on public support test , and it’s averaged out over the 6 years, which means at some point it really needs to operate on it’s own even if it doesn’t at first. It could work out if you find enough people who need the non profit services. The part I’m finding disturbing is the person running the non profit start up program seems to have no idea about the 6 years, and he now won’t answer my questions about that. I only figured it out on my own by doing hours of reading the tax code and what the IRS has to say about it. He’s pushing heavily in his program that you just start out supporting the nonprofit 100% and (if you have a full practice with lots of patients) move people that qualify into the nonprofit. I didn’t have any patients when I started out so was supporting the nonprofit 100%. I don’t want to continue doing that for very long because a nonprofit is essentially supposed to be publicly supported business. While I think it’s makes sense in the beginning to support it, and I think that’s why the IRS gives you the 6 years, it’s got to start helping people and supporting itself or it’s just an individual paying into a nonprofit, getting a salary, applying for pslf… I’m not okay with this. I really had no idea about some of the aspects of managing student loans when I finished school, and that’s coming from someone who was looking into it before I was done with school. I couldn’t find anyone to help me navigate. I couldn’t even find where you find people to help me navigate. Someone else I went to school with talked this guy up, and pointed out several others in my profession that are doing this. I had many, many questions at first, but the guy selling the program did a good job answering them. For the $5k to set up a non profit, I think it’s not a terrible price. He also helped me navigate the student loan management process. I do know people that took years to get a nonprofit set up themselves. The $5k does include lawyers who write up the bylaws for you and do all the legal paperwork. The program also talks about staying compliant and keeping any for profit separate. He does offer a guarantee, but only if you are not able to “qualify for PSLF”, does not guarantee “receiving PSLF”. I think the part that gets me wondering is when I ask myself what would I do if my student loans were paid off today? Would I continue to operate the nonprofit? I would probably continue offering low cost visits to the same people I do now in my non profit. But I could do that without the nonprofit status if I wanted. I’m not finding enough people that need the low cost services I’m offering, at least not yet. Some of my big concerns are is this worth the hassle of running the non profit? How much risk am I putting on myself with potential legal issues with the IRS? I’d much rather pay off the student loans in 10 years but that’s not going to happen unless I make lots of money real soon, or get pslf. After all the work and stress it’s been dealing with aspects of the non profit I’d almost rather just work for a already running non profit for 10 years to get pslf. But I’m also older and would really rather just be my own boss. Anyway, I’m reading your information because I’m having reservations about doing pslf this way and trying to really think through everything. I trusted several people I knew well that said this was a legal way to have pslf. I asked lots of questions and did research, but I’m thinking I could have waited and done more. I can still keep the non profit running and not use it for pslf for the time being. Maybe it will become self-sufficient and I can go back to making myself employed through it. I’m really researching and thinking through all my options right now. I appreciate your article. I think some of the things you said are a little misleading and can be done correctly, but the part you write about is it worth the hassle, is it worth the potential legal trouble if you do it wrong, or if the IRS/Fed Loan decide this can’t count, is spot on. I wasn’t looking for an easy way out, running a nonprofit isn’t easy. The way I saw it I could offer low cost services to people who normally couldn’t afford it and I felt it was a bonus that I could achieve pslf in addition. The mission of the nonprofit was based on what I saw in my community of people needing services I would be offering, but couldn’t afford them due to finances or lack of medical insurance or chronic medical conditions. I was excited about the nonprofit mission and the pslf was secondary. But if it’s going to look shady to the IRS or Fed Loan, I’m not okay with that and I would rather stay out of trouble with government agencies and find another way to help those people I want to help.

    • Travis Hornsby November 9, 2018 at 5:36 PM
      Reply

      I’ll say that I’m not an attorney and everything on this page is just my opinion. With that and 25 cents you can buy some gum, but with that said, every CPA I’ve consulted with on this strategy has said something to the effect of “I wouldn’t touch that with a 10 foot pole.” I think the potential issues with this could happen in an audit. If there’s something the IRS determines to be sketchy, then it could carry consequences that I’m honestly unsure of. I just know that with FedLoan if they approve you for the certification form, it does not mean you will qualify for PSLF. It just means someone glanced at your paperwork and decided to say yes. The rigorous part comes in the end of the application where they will likely scrutinize this far more. So I would feel more comfortable if someone did not offer a guarantee because certification does not mean approval for PSLF. It’s just FedLoan’s opinion. That means a guarantee would have to involve you actually getting it, and an LLC is unlikely in my view to be around in 10 years to be able to make good on that promise. The math of most chiro loan balances allows for an attractive path with PAYE or REPAYE over 20-25 years anyway and you can focus on your practice and not be worried about all this stuff.

      So to me it’s not worth it even if it was a strategy that would work. That said, my belief is that a few audits will happen and there could be real consequences for folks doing it.

  2. Derek March 5, 2019 at 5:43 AM
    Reply

    Well, you certainly make it sound sketchy, but it could very well be done and done legally. You don’t think someone can work 30 hours for the non-profit and a regular or part-time job in addition? I beg to differ there. As to many other things in this post, sketchy does not equal illegal. The IRS is doing a fraction of the auditing it used to, I don’t think that will change any time this century, they can’t even stop the massive EIC fraud. This plan is worth a shot to someone whom generally wants to go this route and isn’t greedy or dodgy. It is possible. It’s just as possible you’ll get nailed by the IRS for something your shady accountant did in the world in general. Meh. It’s all gonna hit the fan in a few years anyway when the rest of us get hit with the tax bill from the 20 and 25 year forgiveness and tons of middle class people start losing their homes and freedom to the IRS. That will be a much bigger issue than a few sketchy non-profits.

    • Travis Hornsby March 5, 2019 at 9:38 AM
      Reply

      It could be, but just because the IRS is auditing less doesnt mean that’s a license to do illegal things. If it’s an honest mistake that’s one thing. I get that folks push the envelope on their tax returns and some of that could be defendable. But setting up a non profit arm of a for profit practice in my opinion is clearly illegal because it’s being done solely for private benefit of getting a loan forgiveness benefit.

  3. Latrina April 11, 2019 at 6:38 AM
    Reply

    Although I want to thank you for the article because it has provided information I need to research and sorry, but I don’t agree. There are thousands of businesses which do this very thing LEGALLY AND WITHOUT FRAUD annually. As with any business, the owner should understand all the legalities and restrictions. Thank you again!

    • Travis Hornsby April 11, 2019 at 7:35 AM
      Reply

      Can you publish 3 examples of businesses that set up their organizations to get PSLF in the past 3 years and are not in violation of private inurement rules? I’m positive there are examples of folks who’ve done this who have certified ECF forms. However, this program has not been audited at all. When taxpayers start forking over tens of billions of dollars, there will absolutely be fraud with the PSLF program. I believe this strategy is one of the ones that will show abuses and could get some people in big trouble. But you can feel free to disagree.

  4. Maurice June 5, 2019 at 5:30 PM
    Reply

    Interesting points, but the 30 hour minimum for part time work (PSLF) requires two part time jobs equaling 30 hours or more. In my case, I work 32 hours as a nurse, which is considered part time by my employer. Ironically, this means that I have to have another part time job in addition to my not-quite-full-time job equalling 30 hours or more. (yes, even though I’m over 30 hours. I would like to start a 501c3 and employ myself for as little time as possible (if you know what that minimum number would be, please let me know). I wouldn’t mind getting another job working for another 501c3, but who will create a part time position for one hour per week or less. I’ve looked. It costs more to create a position than it is worth.
    I am 57, have been working many years as a nurse, have two cardiac stents, and love my current 32 hour per week job. It’s just not going to turn into a full time position anytime soon. My idea is to start a non-profit out of my home that would produce Public Service Announcements (PSAs) for other public service organizations (hospitals, library’s, charitable organizations) using my current home recording studio (my first career was a musician/performer/pruducer). This would combine my two interests (nursing and recording). I would then be the sole employee, one hour per week for minimum wage. Just enough to qualify for PSLF. Thoughts?

    • Travis Hornsby June 6, 2019 at 11:14 AM
      Reply

      I don’t think that would work. Perhaps you could talk to your employer some more as the MN nurses union forced state hospitals to sign off for PSLF if their members were over 30 hrs per week.

    • Miche June 6, 2019 at 12:09 PM
      Reply

      If you are already working 30 hours a week for a 501c3 you definitely want to get your other PSLF ducks in a row. It doesn’t matter if your employer considers 32 hours part-time, it’s the 30 hours worked (on average) per week that is considered to be full time by the PSLF program. But you need to also have the correct loans, be making your payments (even if your payment is $0 it counts towards the 120 payments). If you don’t currently have the correct loans unfortunately you will only start the 120 payment count when all the PSLF qualifications are met. This is where many people get confused and you read the horror stories later about how they thought they qualified but they didn’t actually do anything besides work for a 501c3. I suggest reading the entire webpage here: https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service#qualifying-employment. NO ONE should assume they qualify unless they read through this entire thing and follow every single step, and it’s a really good idea to submit paperwork every year to see if you are making qualifying payments. They will send you a letter back telling you yes or no, and how many qualifying payments you have made.

      • Travis Hornsby June 9, 2019 at 8:44 AM
        Reply

        The form is pretty clear that it’s 30 hours a week or your employer’s definition of full time, whichever is greater. Other than that I agree

        • Maggie February 2, 2021 at 7:35 PM
          Reply

          This is not accurate. Your employer must check the little box that says it is full time employment. It is up to your employer to decide if they will consider it FT or PT on the form. The whole thing is maddening. I asked my employer if they would simply mark the 30 hours/week as FT and they did (even though I work for a huge state system the does not consider 30 hrs FT). It is just a weird way for PSLF to reject applicants.

  5. Maurice June 10, 2019 at 1:52 PM
    Reply

    Exactly. Here’s the quote

    “For PSLF, you are generally considered to work full-time if you meet your employer’s definition of full-time or work at least 30 hours per week, whichever is greater. If you are employed in more than one qualifying part-time job at the same time, you may meet the full-time employment requirement if you work a combined average of at least 30 hours per week with your employers.”

  6. Heather September 19, 2019 at 1:53 PM
    Reply

    Do you feel there are any viable and ethical work-arounds for independent contractors who contract full-time to provide a PSLF eligible service, but are independently contracted and therefore don’t fall in the status of “qualified employment”? I’ve been attempting to look at whether it is possible to have a private nonprofit with a goal of providing the public service being performed and paid for from those contracts rather than an LLC to gain “employee” status while still performing the work (which is only available as independent contracts) and then pay out a salary from that income. Any thoughts?

    • Travis Hornsby September 19, 2019 at 4:57 PM
      Reply

      If it’s a legit non profit that raises funds and has contracts to perform services then it would be fine. But the problem is a legit non profit is difficult to do given the primary reason something it being structured that way is because of loan forgiveness. Our opinion has always been that it violates the rules for non profits to set one up for that sole purpose.

  7. Madeline February 7, 2020 at 10:49 PM
    Reply

    I am 57 and would like to go into early retirement after 11 years as a Civil Service Worker. I recently had a car accident and to be honest my job responsibilities is more than I can physically handle. I don’t even make that much money. I am a licensed real estate broker which we all know has the potential of earning full time public service income in less than full time hours. My question is that now with going into retirement, and 3 years left on PSLF I would like to start a 501c3 for counseling young women. I have a MSEd (reason for student loans) and never had the opportunity (one of most difficult jobs to obtain) to work as school counselor. Ive come this far and don’t want to lose opportunity for loan forgiveness. Should I contact the IRS? What is your expert opinion on this.

    • Travis at Student Loan Planner February 10, 2020 at 9:33 AM
      Reply

      I don’t think you’ll be able to do that unless you can actually afford to pay yourself a full time wage from your 501c3 and you have an independent board of directors from yourself. If you can pay yourself W2 wages and it’s a legitimate non profit then technically that should count. But most people can’t raise the funds necessary for it to be a true full time job and then it doesn’t qualify.

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