In section 5 (ii) the PSLF regulations state, “not a business organized for profit”. What does this mean? Would this include nonprofits recognized by the state, or does it need to be recognized by the IRS as well?

Qualifying employment included full-time paid work for a 501(c)(3) nonprofit.  Some entities get (c)(3) status by operation of law, most have to apply to the IRS.  As for “public service organizations,”  it’s less clear what the regs mean, but presumably non-profits with status like (c)(4), if they meet the rest of the definition.

The IRS does not need to recognize a non-profit as a non-profit in order to qualify for PSLF.  If it is recognized as a non-profit under state law, i.e., your employer is organized as a non-profit corporation under state law, it is not a labor union or partisan political organization, and provides one of the following public services, then it should qualify:

Emergency management, Military service, Public safety, Law enforcement, Public interest law services, Early childhood education (including licensed or regulated childcare, Head Start, and statefunded pre-kindergarten), Public service for individuals with disabilities and the elderly, Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support
occupations), Public education, Public library services, or School library or other school-based services.

Otherwise, it needs to be a 501(c)(3) organization, which usually requires IRS approval.

Hi Heather.  My friend is a veterinarian and she owns her own practice.  Currently she does spay and neuters for humane society animals 3 days per week at cost, as well as affordable vaccination clinics one weekend a month.  Is there any way I can make a non-profit sector within her practice because of these services (or just make her practice registered as a 501c3) and as long as I get my 30 hr/wk in - would that count for the 10 yr forgiveness?  I tried looking on the IRS website for answers, but its not very cut and dry and seems to be more about human hospitals.  If you could point me in the right direction or let me know if that sounds even practical, that would be great!

Regards, Casandra

Hi Heather - regarding defining nonprofit I’m trying to figure out what hospitals qualify.  I’m working with a medical student who is about to start his residency next year.  His income will be higher in 4-5 years, but has a substantial amount of debt from medical student so could start with a IBR repayment plan during residency and that would move to standard when permanent employment occurs.  He’ll be a doctor with high income down the road, but wanted to see if any/what type of hospitals might qualify as he chooses his residency and then permanent employment.  Thanks for any help or information.