Major update for 6 million borrowers on the potential loss of eligibility for pardon of student loans
13 million non -profit workers, including teachers, nurses and university staff, could lose access to … More
Presentation of the student loan potentially in danger for millions
A low -profile provision buried in the GOP tax proposal in 2025 could trigger a significant decline in the eligibility for the delivery of loans and the reimbursement of students, specifically targeting the public service loans program. The bill would allow the secretary of the Treasury to unilaterally revoke the non -profit status of any organization which it designates as a terrorist support organization. Although its language seems to be intended for bad players, the downstream effect could destabilize the PSLF for more than 12.8 million Americans who work on non -profit organizations.
A silent change in a tax bill could vibrate the eligibility for the PSLF to millions
The PSLF program obliges borrowers to work full time for an eligible employer, most often government agencies or 501 (C) (3) non -profit organizations, for 10 years while carrying out reimbursements focused on income. In exchange, the rest of their federal balance of student loans is forgiven. However, if an employer loses his designation 501 (C) (3), his employees become unacceptable to the forgiveness of students’ loans, even years in the program.
Under this bill, the secretary of the Treasury could strip this status without checks and counterweight generally granted to the IRS or Federal courts. This could open the door to revocations with political motivation or ideologically, by placing millions of borrowers at risk of losing the forgiveness where they have been working for years.
How much are you at risk of losing eligibility for the PSLF within the Pardon and Reimbursement of Student Loans?
According to 2022 data from the American Labor Statistics Bureau, around 12.8 million people work for non-profit organizations in the United States. This represents more than 10% of the private workforce. The majority of these workers are grouped in two relevant sectors of the PSLF: health care and education.
- Health care and social assistance: 8.5 million non -profit employees
- Education services (including universities): 2.1 million
- Remaining sectors (civic, arts, social services): 2.2 million
This means that nearly 12.8 million non -profit workers are in areas where student loan debt is typical and admissibility to the PSLF is crucial; Think of nurses in non -profit hospitals, auxiliary teachers, kindergarten teachers in the 12th year in religious schools, social workers, community health staff and early childhood educators. If the bill adopts, none of their PSLF eligibility would be guaranteed.
We can triangulate the population of addressable borrowers who would also be impacted by other means. In lower, we know that around 3.6 million people are eligible for the forgiveness of public service loans according to their employment in eligible public service roles such as education, health care, social work, soldiers and government positions.
Second, according to data from the sector, organizations 501 (C) (3) represent approximately 75% of all non -profit organizations (1.48 million out of 2 million). If 75% of non -profit organizations are 501 (C) (3) and we assume that a similar share of non -profit employment is in these organizations, then around 75% of the 12.8 million non -profit employees work for employers eligible for the PSLF. This would be equivalent to around 9.6 million non -profit employees potentially eligible for PSLF, provided they meet other criteria (correct loan type, etc.). The actual number will probably be a little lower after taking into account the individual use and loan circumstances.
We also know from the TIAA non -profit student debt survey in 2020 which, among non -profit employees, with at least one baccalaureate, around 47% said they currently have student loan debts. This is based on a national survey on a national level with workers in the public and public sector. If we apply the figure of 47% of the TIAA study in total non-profit labor, we obtain approximately 6 million non-profit employees who probably have a student loan debt.
Employees of certain universities already in the reticle and at risk of loss of forgiveness to student loans
President Donald Trump has already called non -profit organizations and even specific institutions in the education space and reported that he intended to act against them. In April 2025, Trump publicly threatened to revoke the non -profit status of Harvard University, accusing him of having housed the inspired ideology of terrorists. It was not a rhetoric of life. Its administration also announced financing gels for Harvard, Columbia, and the University of Pennsylvania for their manipulation of campus demonstrations after the attack on Hamas against Israel on October 7, 2023.
These institutions are 501 (c) (3) non -profit organizations and the main employers eligible for the PSLF. Harvard, for example, employs more than 18,000 people in Massachusetts. Penn and Columbia are also large employers, with thousands of staff members in university roles, health care and public administrative.
Under the current law, the revocation of the status of tax exemption is a long process requiring the examination and justification of the IRS. But the new GOP bill would give this authority only to the secretary of the Treasury, who could make such designations according to a claim of “material support” to terrorism, even if no accusation or surveys has occurred.
This change could instantly disqualify each employee of these PSLF institutions. These months would no longer count, regardless of the distance to which they are to forgiveness of loans. The government would not need a trial, an audit or a vote of the congress, just a designation.
The decree that prepared the ground for the volatility of pardon of student loans
This legislative provision is based on the decree of President Trump at the beginning of this year, ordering the Ministry of Education to strengthen the conditions of eligibility of the PSLF. This ordinance called for new rules for the exclusion of non-profit organizations involved in illegal or anti-American activity, including support for immigration violations, campus demonstrations or what the administration has qualified hate-based movements.
Although this decree has not changed the tax status, it foreshadows this legislative strategy. The treasure granted the single power to label and suspend non -profit organizations, the executive power could quickly cut the PSLF access for entire categories of organizations. The White House did not specify how it defines terrorist support, but observers fear that it will be used to target non -profit organizations of immigration, racial justice groups, climatic organizations or university systems.
Beyond the PSLF: downstream effects in the non-profit sector
Beyond individual borrowers, this bill has a potential structural risk for the non-profit sector. Non-profit organizations can start self-censorship to avoid political reprisals if the Treasury can remove tax exemption status without a judicial review. This could suffocate advocacy, research and direct reproductive health, reinstalling refugees, environmental justice or racial equity.
It could also dissuade professionals from pursuing non -profit careers if PSLF eligibility is considered unstable. This would already worsen educational and health personnel pipelines, where professional exhaustion and turnover are high.
The result of the PSLF, forgiveness and reimbursement of student loans
The GOP tax bill is still in the first stages of the legislative process; However, forgiveness and reimbursement of student loans, and specifically the eligibility for the PSLF, could be fundamentally modified overnight for up to six million borrowers.
