Loan Forgiveness Program

Eligibility

Alumni of the Yale School of Management programs are eligible if they meet the requirements in respect to the type of employment, income, and eligible education loans. Alumni may apply at any time during the first 10 years following graduation. International students are also eligible for the Loan Forgiveness Program. The terms of the Loan Forgiveness Program are subject to change at any time. If you are a graduate of Yale SOM and want to see the terms that apply to your graduating class, please visit the Alumni website.

Employment eligibility

Graduates must be employed full-time by a government organization or nonprofit 501(c)(3) tax-exempt organization in the United States, or the equivalent abroad. Any non-US currencies will be converted into US dollars using the World Bank’s Purchasing Power Parity (PPP) conversion rates.

Alumni graduates are eligible to use leave provisions offered by their eligible employers.

Income eligibility

Beginning with the second year following graduation, income is the applicant’s annual salary as verified by the employer, together with other income (e.g., interest, dividend, capital gains, trust, etc.) listed on the most recent federal income tax return.

The spouse’s salary is included in the calculation (see Award Calculation section). A deduction of $5,000 for each dependent claimed on the federal income tax return is included in the calculation.

These income levels are effective for January 1-December 31, 2023 only. 

Household calculation

We complete the single and married applicant calculations for all married applicants. If your single adjusted income is greater than your married adjusted income, we will use your single adjusted income to determine eligibility.

Married applicant's adjusted income = (Applicant's wages + spouse's wages + all other household income)/2 - $5000 per child

Loan eligibility

The maximum eligible loans for the academic year equal the lesser of:

1. The maximum eligible loans for tuition and fees
2. minus the FAFSA-determined expected family contribution (EFC), or equivalent need determination for internationals
3. minus any scholarship or grant

Repayment will not include any interest on these loans. Alumni will be reimbursed for loan principal at a rate of 1/10 annually. Loans taken for living expenses or anything other than tuition will not be included.

Loans must be certified by the School of Management Office of Financial Aid. Loans taken to replace the student’s EFC are not eligible for support, nor are loans from family or friends.

Loans that are in forbearance or deferment are not eligible for Loan Forgiveness support during the period of forbearance or deferment. 

For joint degree graduates, only loans taken during the semesters in which tuition was paid to SOM are eligible for support.

International students should contact the Office of Financial Aid for information about loan eligibility.
 

Length of program participation

Typically May graduates enter repayment in November with their first payment due December. Graduates may apply in the November cycle following graduation, although proof of loan payment post-grace period will be required before an award is issued. Participants may continue to qualify or move in and out of qualification for the program until ten years from the date they graduated.

We do not reimburse participants for pre-payments made while in-school or during the standard 6-month grace period. Graduates who are eligible to participate in other forgiveness or forbearance/deferment programs must do so.

• Graduation date: May 2021
• First eligible application date: November 2021
• Last month of eligibility: November 2031
   

Calculation of awards

The SOM Office of Financial Aid will determine all awards. Decisions made by the Office of Financial Aid are final.

Loan Forgiveness Program funds are disbursed directly to participants semi-annually (January and July), based on a standard ten-year loan repayment schedule. They are meant to be loan pre-payments, but checks may arrive after the first month’s loan payment is due.

Participants are responsible for making all loan payments and complying with all processing requirements imposed by lenders and collection entities. Graduates who are delinquent with loan repayment at the time of application will not be eligible for the Loan Forgiveness Program; failure to remain in good standing with repayment obligations will result in termination from the program. Participants are required to inform the SOM Office of Financial Aid immediately about any change in eligibility status during the year. 
 

Application and renewal procedure

All Loan Forgiveness Program applications and renewals are accepted during two periods: November 1 – 30 and May 1 – 31. Graduates may apply during either of these windows. Support begins with the month in which the graduate is eligible and may be back-dated if that occurs prior to the application open period. No support will be backdated more than 5 months.

• Participants are required to submit renewal applications annually in order to receive support for the following year. 
• Except for initial applicants, compensation from the SOM Loan Forgiveness Program is a prepayment: January payments are for January – June, and July payments are for July – December. 
   

Change of circumstances

If you have a change of circumstances, please let us know within 30 days.  We will request a response that will document your updated situation.  Adjustments will be determined in the two application windows (November and May), and you will be informed of the financial impact based on the effective date of the change.

• Based on the effective date of your change, there may be a retroactive increase or decrease to your funding based on the new information.  
• If it is an increase, we will process the increase in your January or July payment.  If it a decrease in funding, we will decrease your next payment by that amount or send you instructions on returning funds.  
• Failure to report a change in circumstances within 30 days may result in immediate dismissal from the Loan Forgiveness Program.
   

Tax treatment

The determination of whether awards are taxable for graduates is based on your employer. In those positions where graduates are employed by U.S. nonprofit agencies holding 501(c)3 status other than Yale University, the award is considered non-taxable. This also includes non-profit-equivalent companies abroad, as IRS regulations around taxability cover only 501(c)3 status.

• Awards for graduates employed by a non-501(c)3 agency are taxable.
• For graduates who are Yale employees (even while working on behalf of third party organizations or federal governmental agency through an IPA agreement), the award is taxable.
• Graduates with taxable awards will be issued a 1099-MISC form for the amount of their award annually for tax purposes.

A note on post-graduation loan options

As lending markets change, several lenders are now offering to refinance/consolidation loans specifically for MBA students. Since these vendors will only refinance your education loans, the resulting loan will also be eligible for loan forgiveness. Participants are encouraged to participate in lower interest rate programs. More information can be found on the post-graduation loan options website.