As roughly 43 million borrowers await potential student loan forgiveness through the White House’s recent announcement, we are taking a look at how Michigan philanthropy continues to lead in seeding and supporting innovative solutions to address the student debt crisis.
The Community Foundation of St. Clair County, with thought partnership from surrounding community foundations, launched the Come Home Award post-graduation scholarship program in 2016. It was the first program of its kind in the country and caught the attention of lawmakers as an innovative model for philanthropy to help address the student debt crisis and attract, support and retain talent in communities.
When the program launched, a national effort began to introduce legislation that would formally recognize post-graduation scholarships as a charitable activity. Currently, unlike traditional scholarships, recipients of post-graduation scholarships are required to pay income tax on the grants they receive.
“Such legislation doesn’t currently exist, and foundations must jump through considerable hurdles to launch their own version of the Come Home program. Although foundations have broad flexibility to help pay off or avoid student debt while a young person is in college, once a person graduates from college, we are severely limited in our ability to provide financial support,” Randy Maiers, president of the Community Foundation of St. Clair County shared in his recent blog post.
After several years of advocacy efforts led by the community foundation, the Council on Foundations (COF) and CMF, Senator Gary Peters introduced the Workforce Development Through Post-Graduation Scholarship Act (S.2191 / H.R. 4095).
The legislation creates a smoother runway for scholarship recipients and foundations that administer such programs and stimulates economic growth by:
- Excluding from an individual’s taxable income a post-graduation scholarship grant in the same manner as traditional scholarships.
- Ensuring that the local programs are benefiting communities most in need by requiring recipients to live and work in the applicable community defined as any area that has a bachelor’s degree attainment rate that is below the state or national average.
- Defining post-graduation scholarship grants as a charitable activity would create another tool in philanthropy’s toolbox to sustainably address local needs long-term.
“We certainly recognize that this program isn’t the only or largest solution to student debt. Yet for several years now, foundations across America have been asking our elected officials to allow us to help address the issue. We’re not asking for handouts. We’re not asking for tax breaks. We’re asking to be a part of the long-term solution,” Maiers said.
Read Maiers’ full blog.
Those with federal student loans who work at charitable nonprofits and in other public-service jobs are encouraged to take immediate action before October 31 to secure a waiver under the Public Service Loan Forgiveness (PSLF) program. All employees of charitable nonprofits and the government can check their eligibility using the PSLF Help Tool.
If you’re interested in learning more about the resources needed to ensure early childhood education and human services staff can access loan forgiveness through the limited PSLF waiver before the deadline, join the Office of Head Start, Office of Early Childhood Development and U.S. Department of Education for a discussion on how to support applicants applying for the PSLF waiver.