PSLF & Double Part-Time Employment

Qualifying employment is a critical component to the PSLF formula:

Eligible Loans
+ Qualifying Payments
+ Qualifying Work
x 120 months (10 years)
= Public Service Loan Forgiveness

But most folks haven’t considered a nuance in the PSLF law that currently applies to very few people but could easily apply to more. Part-time work counts, so long as you have enough of it to make a “full-time” equivalent.

From the official PSLF FAQ:

I’m working for more than one employer during the same period of time, but I’m not employed by either on a full-time basis. Will my combined employment be considered full-time for PSLF?

Yes, as long as the combined number of hours you work for each employer equals at least 30 hours per week. Each employer must be a qualifying employer for the employment to be included in determining whether you are employed on a full-time basis. For example, if you worked for one qualifying employer for 10 hours per week and you concurrently worked for a second qualifying employer for 20 hours per week, this would meet the 30 hours per week requirement.

That combined 30-hour threshold is a key facet. Because normally (emphasis mine):

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.

There are plenty of folks working 30 hours or more per week but who are still considered “part-time” by their employer. An 8 or 9-hour workday with a 5-day work week is 40 or 45 hours respectively. A part-time employee working 80% at four days a week might work a 32 or 36 hour week: already enough hours to theoretically qualify for PSLF.

This suggests that a lot of people working part-time for a nonprofit employer may still qualify for PSLF if they can find a small amount of additional part-time work to get themselves over the 30 hours per week hump.

Put another way, not everyone who needs to or wants to work part-time needs to abandon PSLF.

And, not everyone needs to work “full-time” in order to achieve loan forgiveness.

Token efforts

To double down, if a person’s main “part-time” work is already 30 hours per week, then literally any paid employed qualifying position should automatically make the person qualified because they already have the raw hours they need.

Of critical importance, there are no specific compensation stipulations regarding what constitutes qualifying part-time employment. It is the number of hours worked in a paid position that matters, not how well (or poorly) paid you are.

At this point, the gears may be turning in your head, and it’s worth noting: this is not actually a loophole. But it is a potential gamechanger for how people look at both their main job and evaluate potential additional opportunities.

On a related note, there is also no rule in the PSLF law that states that you can’t also have a for-profit job. What you need is to have enough qualifying nonprofit work. These are not mutually exclusive.

There’s also no rule that both positions have to be related in any way. You could be a doctor and also work at a food bank.

You need either a full-time qualifying job or any combination of 2 or more jobs that hit 30 hours/week worked.

Too much money?

Ultimately, the more money you make, the more money you pay toward your loans within an income-driven repayment plan and thus the less money you will have forgiven after your 120 payments. If you’re constantly in a negative amortization scenario, then it probably won’t matter, but if IDR repayments were already making good progress in paying down your loans, then sometimes extra work can change the calculus.

Double employment is a great way to pursue an unsatisfied passion while essentially having the government pay your salary indirectly through loan forgiveness. But if you are fortunate enough to work at a well-funded non-profit and earn too much money with your second endeavor, it may make loan forgiveness more expensive than just paying off the loans yourself.

Start your own non-profit

You could (theoretically) even create your own qualifying nonprofit organization and work for it part-time to get over the hump (you could also theoretically do that full-time too obviously). Surprisingly, the barriers to creating your own 501(c)(3) organization are actually not that cumbersome, and the PSLF rules even say that it is OK to certify your own employment eligibility if you’re the only person who can do so.

Again, from the FAQ:

I’m the only official who can certify my employment. Can I certify my own qualifying employment?

Yes, you may certify your own employment if you are the only employee of the organization who can do so. However, we will request additional documentation concerning your employment, such as earnings statements, IRS W-2 forms, your application for tax-exempt status, or any other documentation required to be filed with the IRS on a periodic basis regarding the activities of the organization.

Note that if one were to try this potentially super shady solution, it would be highly prudent to also keep extensive records including a detailed time log to document your work hours and output. People absolutely should not be trying to convert their for-profit personal businesses into fake non-profits, but it does mean that you can be rewarded for making the world a better place.

Nonetheless, while there are clearly honest and legitimate ways to do this and achieve PSLF; it’s undoubtedly ripe for abuse. I think it’s safe to say that anyone who plans on certifying their own qualifying employment–even in conjunction with a more traditional job–is setting themselves up for a lot of questions and some serious bureaucratic hassle. Annual certification forms would be an absolute must. Running a real non-profit is a must. And frankly, given the number of people who are likely to be caught with fake paper-only nonprofits created for personal gain, it’s probably not a great idea.

A hypothetical example

I work as a neuroradiologist full-time for a non-qualifying employer, but for purposes of discussion, let’s say I worked 80% at a qualifying academic institution. In this scenario, I would easily surpass the 30 hours/week needed for PSLF, but since I’m part time, my main job won’t qualify on it own.

Conveniently, since 2009, I’ve been quietly editing and publishing the longest-running exclusively Twitter-based publication for fiction in the world. It’s called Nanoism, and it’s a literary magazine that even pays “professional“ rates to authors. This effort costs money and time and doesn’t earn me a penny. It’s already functionally non-profit in the sense that the only time money changes hands is when I pay writers or run contests to benefit charities (which I admit I haven’t done in a while).

Literary organizations like this are perfectly suited for 501(c)(3) nonprofit status and there are tons and tons out there, and though it would take some nontrivial hassle to file for this, I could do so. With official nonprofit status, suddenly the spare time I’ve been spending running a strange little Twitter-based literary venue would actually go toward loan forgiveness, which could help me redouble my efforts, expand the organization, plan more educational outreach, run more charity fundraising events, finally publish the anthology I’ve been promising for the past decade, etc. It would go from an unusual hobby to an unusual hobby that indirectly secures my financial future.

Since (in this example) I work enough part-time hours already anyway, a massive additional time commitment is unnecessary. Just enough that my organization is a real, functioning non-profit (which–let’s face it–would probably still end up a massive additional time commitment, but you see what I’m getting at here). Making a legit would also probably entail bringing in more people and growing the organization. A one-member non-profit might look mighty suspicious to the government with hundreds of thousands of bucks on the line.

If you have a skill or a craft and are on the cusp of a qualifying gig for PSLF, I’m not necessarily suggesting that starting your own non-profit is the way to go, because it’s not. For most people, really, it’s almost certainly not. But I am suggesting that you look for ways to use your skills for deserving organizations if it might make all the difference. You don’t need a big salary; you just need to be a paid employee.

Take home

A non-profit side-hustle could be more profitable than you’d think.

For people working full-time just for PSLF, keep in mind that you may not be quite as tied down as you might think.