You finished college with more debt than you intended and now you are having a tough time making ends meet despite working full-time in your chosen career. Minimum monthly student loan payments are squeezing out any opportunity to add more to your vacation fund let alone a retirement plan. Despite these realities, teaching is still your passion and there is nothing else you’d rather do.
Participating in an income-based student loan repayment plan allows borrowers to apply for student loan forgiveness after 20-25 years, but do you really want to wait that long to say goodbye to those monthly payments?
Programs that offer student loan forgiveness for teachers invite you to apply as early as the first year of teaching service and can eventually relieve you of up to 100% of your repayment responsibility.
Student loan forgiveness programs are available for your Federal Student Loans however each program has unique qualification requirements. There are four programs that you should look at today if your goal is to slash student loan debt.
What Is Student Loan Forgiveness For Teachers?
Student loan forgiveness refers to the cancellation of a borrower’s repayment obligation for all or part of their student loan balance. Forgiveness programs typically encourage teachers to work in designated low-income areas, high need instructional areas, and teach a minimum number of academic years.
The type of loan owed, the origination date of the loan and the subject matter taught by the teacher often influences the amount of student loan forgiveness.
Let’s take a look at a few programs that financially encourage teachers to stay in arguably one of the noblest professions.
Student Loan Forgiveness Programs for Teachers
1. Federal Teacher Loan Forgiveness Program
This program is available to teachers who have completed at least five consecutive years of teaching service in a classroom setting at a public or non-profit private elementary, public or non-profit private secondary school or an educational service agency which services low-income families. An educational service agency is an organization authorized by the state to oversee other local educational agencies.
Borrowers must confirm whether or not their employer is recognized as an entity that services low-income families. The U.S. Department of Education provides the Teacher Cancellation Low Income Directory for such use.
This resource is updated each academic year on or before May 1. If the current academic year is unavailable, then the prior year’s directory may be used.
Schools and educational service agencies are not required to be listed for each year of the teacher’s service to qualify for Federal Teacher Loan Forgiveness. As long as they are listed in at least one of the years of service, the subsequent years of teaching service may count towards the required five years of teaching.
- Available to both Direct Loan and Federal Family Education Loan (FFEL) borrowers
- Applicants must have been employed as a full-time teacher at an eligible school or educational service agency for five complete and consecutive academic years before applying.
- At least one of the five complete and consecutive academic years must be after the 1997-98 academic year. Academic years may be combined among different schools or educational service agencies as long as they are consecutive.
Maximum Forgiveness Amount:
- Up to $17,500 for highly qualified full-time elementary and secondary teachers which is based on subject matter taught
- Up to $5,000 for full-time elementary and secondary teachers
- PLUS and Perkins loans are not eligible for forgiveness through this program.
- The five-year teaching requirement must be fulfilled before applications for student loan forgiveness can be considered.
- Borrowers who received AmeriCorps benefits for teaching will not receive credit towards the five-year requirement in the Federal Teacher Loan Forgiveness program for the same teaching service.
- Defaulted loans are ineligible for forgiveness unless a satisfactory repayment arrangement has been made with the holder of the defaulted loan.
2. State-sponsored Student Loan Forgiveness Programs
The American Federation of Teachers (AFT) maintains a searchable loan forgiveness database that allows borrowers to find local and state programs by grade level, position, district type and subject area. Many loan forgiveness programs in the database have deadlines, so we encourage borrowers to monitor the site or sign up for email alerts. Eligibility requirements vary, and application periods are short.
Not every state’s programs are listed in the AFT database, so it’s a good idea to check the education agency in your state for student loan forgiveness options for teachers. For example, the Texas Education Agency has a useful page dedicated to student loan forgiveness for teachers, but none of the programs were listed in the AFT database.
Unsure of the name or location of your state’s education department or agency? Use the state contact resource provided by the U.S. Department of Education. Priority contact should be made with the State Department of Education and the State Higher Education Agency in your state.
Search “student loan forgiveness” on each agency website. If no results are found, contact the agency via telephone since some sites are not updated in a timely fashion.
3. Public Service Loan Forgiveness
This program is available to individuals who maintain full-time employment with a government employer under the Public Service Loan Forgiveness (PSLF) Program. Eligible employers include public elementary and secondary schools, public colleges and universities and public child and family service agencies. This program is particularly helpful when you owe more than $50,000.
- Only non-defaulted Direct Loans are eligible for PSLF
- 120 qualifying monthly loan payments are needed before applying for PSLF; however, they do not need to be consecutive
- Payments made when none were required do not count towards the 120 payment threshold, i.e., during the grace period; while in school; during deferment or forbearance periods. Also, basic eligibility for the PSLF program requires that qualifying loan payments are those that a borrower makes:
- after October 1, 2007;
- under a qualifying repayment plan;
- for the amount due as reflected on the statement;
- no later than 15 days after the due date; and
- while employed full-time by a qualifying employer.
Maximum Forgiveness Amount:
- The entire loan balance remaining after the borrower has made 120 qualifying monthly payments is eligible for student loan forgiveness for public service under this program.
- The 120 qualifying payments equate to at least ten years of repayment before applying for PSLF.
- Borrowers must apply for PSLF and have their employer certify employment. You must be working at the qualifying employer at the time of application.
4. Federal Perkins Loan Cancellation for Teachers
As the name implies, this program only applies to borrowers of a Federal Perkins Loan. Similar to other loan cancellation programs, full-time work in specific disciplines or low-income service areas is an essential eligibility requirement. Teachers must be directly employed by the school system. This is where the similarities end.
This program has various restrictions and exceptions depending on your particular circumstances, but we have provided the highlights of the program below. The upside of this program is that teachers do not need to be certified or licensed to be eligible for the program.
This program is unique in that it is not limited to teachers who provide instruction in a classroom setting. Other closely related positions and volunteer service may help you qualify for full or partial loan forgiveness. Exact forgiveness amounts will vary based on the type of Federal Perkins Loan and the date the loan originated.
Up to 100% of the loan may be canceled based on years of eligible service and other position specific requirements.
- Must teach full-time at a low-income school or teach qualifying subjects for a full academic year
- Non-teaching positions generally allow for up to 100% loan forgiveness for five years of eligible service
Maximum Forgiveness Amount:
Up to 100% of the loan may be canceled in the following increments and includes the interest that accrued during the year:
- 15% canceled per year for the first and second years of service
- 20% canceled for the third and fourth years
- 30% canceled for the fifth year
- Basic teacher eligibility starts with the actual job descriptions as opposed to the position title.
- Teachers teaching at most post-secondary educational institutions are ineligible for this program.
Generally, borrowers are not required to pay income tax on loan forgiveness amounts when qualifying employment is an eligibility requirement. Tax liability should not be overlooked when considering other student loan debt elimination options. Loan discharge is another way student loans can be canceled however the discharge amount may be treated as taxable income.
Depending on the circumstances of the loan discharge, a refund of prior loan payments may be due to the borrower. A successful loan discharge removes the borrower’s obligation to repay the remaining balance of the loan. Here are common instances under which a student loan may be canceled:
- School closure before the borrower completes the program of study
- Military service-related disability
- Spouse of a victim of the events of 9/11
- Total and permanent disability
Borrowers (or family members of the borrower) will need to complete an application and provide documentation confirming loan discharge eligibility.
How To Decide on a Student Loan Forgiveness Program
Before making a decision, we recommend that borrowers compare state and local programs against federally sponsored programs. In some cases, loan forgiveness applications may be combined. For example, the Illinois Teachers and Child Care Providers Loan Repayment Program provides a matching grant up to $5000.00 to FFEL borrowers who have qualified for federal student loan forgiveness.
Other programs like the North Dakota University Teacher Shortage Loan Forgiveness Program are not based on prior federal student loan forgiveness program qualification but may offer less in the way of total forgiveness amount.
Yet still, the Texas Math and Science Scholar Loan Repayment Program has over $2 million appropriated to eligible teachers but prohibits recipients from receiving other state or federal loan repayment assistance. The point is that a variety of options exist, and program eligibility will depend on your situation.
What If You’re Not Eligible For A Student Loan Forgiveness Program Today
If you determine that you are currently ineligible for any federal, state or local student loan forgiveness program, we suggest the following actions:
- To loosen the chokehold of monthly student loan payments, consider an income-based repayment plan for its ability to lower your payments.
- Check the American Federation of Teachers’ searchable loan forgiveness database every month for new loan forgiveness opportunities. Timely application is key. Some programs require borrowers to apply within six months of becoming eligible for a program.
- Check for updates to your state education agency’s student loan forgiveness page at least once a semester for new opportunities to reduce or eliminate your student loan debt.
- Ask your employer or other teaching professionals about state or local loan forgiveness programs – and keep asking. Other programs geared toward teachers can assist with overall debt reduction.
The earlier you begin researching options that provide student loan forgiveness for teachers, the better position you will be in to take control of your loan debt. If you’re not eligible for a loan forgiveness program today, don’t give up. Keep your eyes and ears open since new programs appear at least annually across the country.
Let us know in the comments what you’re going through as a teacher with big student debt.
If you’d rather hire an expert to figure this all out for you, Student Loan Planner can help you make a custom plan to get you out of student debt faster and save you money.