Could public service loan forgiveness help recruit and retain employees?

What if you could give one of your employees a “raise” their first year without it costing your district anything? Would this help with your recruitment and retention efforts?

One tool available is Public Service Loan Forgiveness. Different than Teacher Loan Forgiveness, this federal program may save your staff thousands of dollars, and it won’t cost your district any money.

But, statistics show the program is either not being implemented or is being managed incorrectly.¹ When you know the rules, you can utilize Public Service Loan Forgiveness to hire and retain employees.

Let’s look at the facts on student loans.

1 in 4 Americans (44.7 million people) have student loan debt.¹
Average employee debt: $37,172.¹
U.S. student loan debt is now the second-highest consumer debt category - behind only mortgage debt – and higher than both credit cards and auto loans.²
Based on a monthly payment for a 10-year loan and what percentage of teacher's $38,617 annual salary. ³

Interest Rate	$35,000 in student debt	$40,000 in student debt
4%	$354 (11.0%)	$405 (12.6%)
5%	$371 (11.5%)	$424 (13.2%)
6%	$389 (12.1%)	$444 (13.8%)
7%	$406 (12.6%)	$464 (14.4%)
8%	$425 (13.2%)	$485 (15.1%)
9%	$443 (13.8%)	$507 (15.7%)

^{Based on a $38,617 annual salary.}

What is public service loan forgiveness (PSLF)?

Established in 2007, PSLF forgives federal student loans for borrowers who are employed full-time (30+ hours per week) in an eligible public service organization. This can include federal, state, or local public service jobs or 501(c)(3) nonprofit jobs.⁴

If an employee works full-time for a qualified not-for-profit employer and makes 120 qualifying payments to their qualified student loan, any balance remaining after those 10 years of payments will be forgiven tax-free (principal & interest) by the federal government. And, the borrower’s monthly payment may be reduced, bringing immediate relief to the employee’s monthly expenses.

78% of employees with current or future student loan debt want their employer to offer student loan benefits, and 65% of employees over age 55 in these categories want the same.⁵

How can Public Service Loan Forgiveness help your district?

For employers, Public Service Loan Forgiveness can help with employee recruitment and retention, but just as important, it’s a great (free!) resource to help your employees who work in public service.

Constant turnover exacerbates staffing difficulties that lead to shortages
High teacher turnover rates negatively impact student achievement
Students suffer the consequences: substitute teachers, canceled classes, and inexperienced, underprepared teachers

Some experts estimate that each teacher who leaves costs about $9,000 in rural districts and as much as $21,000 in urban districts.⁶

So, why don’t all employers promote this program?

As a fairly new government program, there’s often a lack of knowledge that it exists. Not only are recent graduates entering the workforce unfamiliar, but so too are their parents. Many employers and employees alike may often feel that the program sounds too good to be true and therefore don’t pursue it.

Like any government program, there is a filing process that may seem complicated and could be one reason employees aren’t further pursuing it. However, many companies partner with public service organizations to offer employee consultation and filing assistance.

I’m interested. How do I get the resources my employees need to get started?

If you decide to implement PSLF, there are many organizations that offer a fee-for-service to complete the filing. While American Fidelity doesn’t offer filing services, we can help you select the best company for your organization and your employees based on others with whom we’ve worked.

As a longtime partner of the education community, we believe in what you do and want to be a continued resource for your full employee benefits program. Helping you with recruitment and retention efforts and serving your employees with this valuable program is at the heart of what we do. Contact us for guidance on getting started.

This blog is up to date as of November 2020 and has not been updated for changes in the law, administration or current events.