North Carolina Center for Nonprofits Nonprofit Policy Update newsletter

September 9, 2022

In this issue...

Ask your local candidates to complete nonprofit questionnaire

Nonprofit employees could owe state taxes on cancelled student debt

Take action today: Make sure your nonprofit’s employees know about PSLF waiver

Join nationwide celebration of democracy on September 20

DHS finalizes “fair and humane” public charge rule

Ask Your Local Candidates to Complete Nonprofit Questionnaire

Earlier this year, the Center sent a candidate questionnaire on nonprofit issues to all North Carolina candidates for Congress and the NC General Assembly. The questionnaire is intended to help nonprofit leaders learn more about the candidates on their ballots in the 2022 election and also to help candidates have a better awareness of the work of nonprofits. Last week, we reached out to all general election candidates who have not yet responded to encourage them to complete the questionnaire by September 15.

Your local candidates for office are more likely to respond to the questionnaire if they hear from you rather than from the Center. Please take a few minutes to reach out to your local candidates to ask them to complete the questionnaire. We’ve made it easy with this template you can customize and send to candidates running in your county who haven’t yet replied – their names and email addresses can all be found with this interactive county map.

Nonprofit Employees Could Owe State Taxes on Cancelled Student Debt

Last month, President Joe Biden announced a plan to cancel a significant portion of student debt for millions of Americans. The U.S. Department of Education will cancel up to $20,000 of student debt for many Pell grant recipients and up to $10,000 of student debt for many other borrowers. To qualify for this student debt relief, borrowers must have incomes of $125,000 or less per year for individuals or $250,000 per year for married couples. Thousands of nonprofit employees in North Carolina are expected to qualify for student loan forgiveness under the debt cancellation plan. The Education Department recently published FAQs addressing some common questions about debt cancellation, including the process for applying for cancellation, how debt cancellation works for borrowers in the Public Service Loan Forgiveness (PSLF) program, and how remaining loan balances will be treated after cancellation. The online debt cancellation application form is expected to be available next month.

Nonprofit employees who receive student loan forgiveness will need to be aware of the tax implications of their cancelled student debt. A provision of the 2021 American Rescue Act Plan excludes student loan forgiveness from income for federal tax purposes, meaning borrowers – including nonprofit employees – who receive debt cancellation will not need to pay federal income tax on the amount of their student loans that are forgiven. However, the NC Department of Revenue recently clarified that student loan forgiveness is taxable income for the purposes of state income taxes, so borrowers will need to pay state income tax on the amount of their student loans that are forgiven. Unless the NC General Assembly changes this law next year, North Carolina will be one of only seven states to tax borrowers’ student loan forgiveness.

Take Action Today: Make Sure Your Nonprofit’s Employees Know About PSLF Waiver

Nonprofit employees have a little over two months to take advantage of the temporary Public Service Loan Forgiveness (PSLF) waiver. This temporary waiver makes it possible for many nonprofit workers to receive credit for past periods of repayment that would otherwise not qualify for the PSLF program, thereby reducing or potentially eliminating student loan debt.  

The PSLF program forgives the balance of most federal student loans after ten years working for charitable nonprofits and governments. Many nonprofit workers with student debt may not be aware of the benefits of the PSLF program or realize that the temporary waiver can provide immediate forgiveness for some borrowers. So far, borrowers from North Carolina have been approved for more than $246 million in student loan forgiveness under the waiver.

Here are three things your nonprofit can (and should) do today to help ensure that your eligible employees take advantage of the temporary PSLF wavier:

  1. Remind your employees about the temporary PSLF waiver and the October 31 deadline in any upcoming staff meetings or communications with your employees. You can share the U.S. Department of Education’s free resources about the waiver (note that the website has had some delays recently due to the high level of interest in the waiver).
  2. Make it easier for your employees to apply for the waiver by ensuring they know your nonprofit’s employer identification number (EIN) and the contact information for the person on your staff to direct PSLF forms and related questions.
  3. Encourage your employees to check out The Institute of Student Loan Advisors (TISLA), a nonprofit with free information about PSLF, how you might qualify, and all things student loans.

Join Nationwide Celebration of Democracy on September 20

National Voter Registration Day (September 20) is just 11 days away! This nationwide celebration of democracy is a great opportunity for nonprofits to ensure that their staff, volunteers, and community members are registered to vote. Sign up today to join the nationwide effort to register hundreds of thousands of voters on September 20.

DHS Finalizes “Fair and Humane” Public Charge Rule

Yesterday, the U.S. Department of Homeland Security (DHS) announced that it has finalized a narrower version of the “public charge” regulation that had been stopped by a court in November 2020. Since the 19th century, American immigration officials have been allowed to deny visas to people who were deemed likely to be a “public charge,” meaning they would rely principally on government assistance. The public charge rule allows immigration officials to give greater weight to applicants' medical history, income levels, and dependency on public assistance in determining whether to grant lawful immigration status. The new rule, which DHS deemed “fair and humane” will not allow immigration officials to consider noncash assistance like the Supplemental Nutrition Assistance Program (SNAP) or Medicaid in applying the rule. Many nonprofits had expressed concerns that the Trump-era public charge rule, which took many noncash benefits into consideration, would discourage immigrants from using public benefits such as SNAP and Medicaid and would cause disparate treatment of immigrant families who are at or near the federal poverty level. The new rule is scheduled to be published in the Federal Register today and take effect on December 23.

The Center provides Nonprofit Policy Update each week as a benefit to its nonprofit members. However, to help all North Carolina nonprofits respond to the COVID-19 pandemic, we're temporarily providing this newsletter to non-member nonprofits. Don’t miss out – become a member to ensure you continue receiving these updates along with many other valuable benefits.

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Nonprofit Policy Update is a weekly newsletter for current members of the North Carolina Center for Nonprofits. We track state and federal policy issues that affect all 501(c)(3) nonprofits. Learn about the Center's public policy priorities. For more information, contact David Heinen, Vice President for Public Policy and Advocacy.