If you teach, you may qualify for some student loan forgiveness for teachers that are designed to cancel your student debt entirely or forget a significant portion of your student loan debt.
The teaching profession is rewarding no doubt, yet these rewards sometimes come at the expense of making a great salary. Good news is that you could have a real impact on your student loan, so you can continue to focus on making positive impact on the students you teach.
How to Qualify for Student Loan Forgiveness for Teachers
Although the requirements for getting teacher loan forgiveness or teacher cancellation may look overwhelming at first, if you’ve been engaged in the profession for a while, you might already qualify for one of these student debts relief options.
Teacher Loan Forgiveness
To qualify for teacher loan forgiveness, one of the essential requirements is teaching full-time for 5 complete and consecutive years at a qualifying low-income elementary school, educational service agency or secondary school.
Aside this, one of these years must have been completed after the 1997-1998 academic year. It should also be noted that Special Education teachers also qualify as teachers for the teacher loan forgiveness program.
The Department of Education (DOE) describes Low-income schools as:
- Schools in a district that qualify for funding under Title I the amended Elementary and Secondary Education Act of 1965
- Schools operated by the Bureau of Indian Education (BIE) or operated on Indian reservations by tribal groups while under contract with BIE
- Low-income schools listed on the Department of Education’s online database for the years you taught at the school
- Qualifying educational service agencies any time after the 2007-08 academic year
- Schools selected by the Department of Education that consist of over 30 percent of students who qualify for services under Title I
- Schools listed in the Annual Directory of Designated Low-Income Schools for Teacher Cancellation Benefits
Additionally, even if your school qualified under any of the requirements listed above during at least 1 year of your teaching service, more years after that at the school may still be counted towards your 5 years of required service. Plus, if you were to complete a full academic year of teaching under these conditions, the year may also be considered if:
- School leadership regards your time as a fulfillment of contract requirements
- You completed more than one-half of the academic year
- Circumstances stopped you from completing the academic year if
- Your return to postsecondary education in a directly related area of study on at least a half-time basis
- You spent more than 30 days in active duty status as an Armed Forces reserve member
- A condition covered under the Family and Medical Leave Act (FMLA) of 1993 prevented you from completing the year
The last but not the least is that you need to be a borrower of a qualifying federal student loan that is not hard. These loans feature Federal Stafford Loans and all Direct Loans originating after October 1, 1998, but do not include PLUS Loans.
Perkins Loan Cancellation
If you have applied for a Perkins Loan and got approved, you may be able to qualify for loan cancellation or deferment, depending on your eligibility.
Getting approval for a teacher cancellation first requires you to be a teacher whose school year serves low-income families; a Special Education teacher who teaches disabled students ranging from infants to secondary school-age youth; a teacher in a field that includes mathematics, science, foreign languages, bilingual education, or any other field established by your state’s education agency as having a shortage of qualified teachers. Please note, the above criteria also apply to student loan deferments for teachers.
For the sake of the Perkins Loan Cancellation, you are said to be a teacher if you:
- Teach students directly in a classroom setting
- Provide educational services directly related to classroom teaching (e.g. school librarians or guidance counselors)
- Offer classroom-type teaching in a non-classroom setting
Aside qualifying as a teacher, you will need to finish at least one complete academic year, or its equivalent, as a full-time teacher. This may feature 2 consecutive half-years, excluding summer sessions, and generally be within a 12-month period.
Other considerations for this requirement include:
- Teaching part-time in two or more schools at the same time if one of the school’s officials certifies you as a full-time teacher
- Teaching at a low-income school as designated by your state’s education agency, meaning it is in a school district that qualified for federal Title I funds for the year you are seeking cancellation for, and enrollment consisted of over 30 percent of students in the Title I program
- Teaching at a school listed on the DOE’s online database for low-income schools
- Teaching at an elementary or secondary school operated by the Bureau of Indian Education (BIE) or operated on Indian reservations by tribal groups while under contract with BIE
- Teaching at a private school with non-profit status as designated by the IRS, and the school provides elementary and/or secondary education approved by state law
- Teaching at a preschool or prekindergarten program that is considered part of a school’s elementary education program by the state
- Teaching at an educational service agency on or after August 14, 2008
- Teaching Special Education full-time to disabled students ranging from infants to secondary school-age youth as a registered, licensed, certified, instructor whose services are part of the educational curriculum for handicapped children, which features:
- Speech and language pathology and audiology
- Psychological and counseling services
- Recreational therapy
- Physical therapy
- Occupational therapy
- Teaching in a subject area that has been designated as having a shortage by your state’s education agency for the year you are seeking cancellation; however, if you taught full-time in the following subject areas, you also qualify if the majority of classes you teach include:
- Bilingual education
- Foreign language
Another Option for Teacher Student Loan Forgiveness
For teachers with an ample amount of student loan debt, there’s also a chance you could qualify for the PSLF (Public Service Loan Forgiveness Program), that offers debt forgiveness to eligible applicants.
Learn more about the PSLF Program.
See if you can take advantage of teacher loan forgiveness or cancellation for free.
Public Service Loan Forgiveness for Teachers
Teacher in search of student loan forgiveness options can check out the Public Service Loan Forgiveness (PSLF). According to the Department of Education, PSLF “has the broadest employment qualification requirements of the federal programs listed – It doesn’t need you to teach at a low-income public school, or even need to be a teacher. Many of the full-time public and private elementary and secondary school teachers will meet the employment requirements.”
PSLF is a Federal student loan forgiveness available to anyone with qualifying Federal Direct Loans and who meets all the program requirements. Those requirements are:
- Work for a qualifying non-profit or government organization the whole time you are making qualifying payments, as well as during the application process.
- Have student loans through any federal income-driven repayment programs
- Make 120 qualifying payments on your student loan. A qualifying payment is one that is on-time and paid in full, and the 120 payments don’t need to be consecutive.
Which repayment plans qualify for PSLF?
All 4 income-driven repayments plans that meet the PSLF: Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), Income-Based Repayment (IBR) and Income-Contingent Repayment (ICR).
Technically, the standard 10-year payment plan qualifies for PSLF as well. But, your payments on student loan aren’t reduced within the standard repayment plan so your student loan debt would be paid off by the time you reached 120 payments.
PSLF requires you to have direct loans. If your student loan forgiveness for teachers are non-Direct federal student loans, you’d first need to consolidate them into a Direct Consolidation loan. If you have both types of loans, its best to only consolidate your non-direct loans. This is because any payments made on your direct loans before consolidating would no longer count toward your 120 loan payment count.
While some student loan forgiveness programs are taxable, PSLF is not. Forgiven loans aren’t considered income by the Internal Revenue Service (IRS).
To apply, you need to fill out and submit the PSLF Application for Forgiveness. Another important step in qualifying for PSLF is submitting the Employment Certification for Public Service Loan Forgiveness form annually and any time you change employers.
Comparing Teacher Loan Forgiveness vs. PSLF
Any teacher who has taken any student loans in the past would run to grab an easy way to wipe out that debt and create more financial freedom. Not only would it eliminate a huge stress in your life, but also free up money for other life goals like starting a family, saving for retirement, and buying a home.
The issue with federal teacher loan forgiveness for a lot of teachers are the strict requirements you must meet to be awarded the total $17,500 in loan forgives. While the alternative $5,000 option is helpful, if you have over $25,000 in student loan debt, you are still left with a hefty amount to pay off.
Another problem might be the issue of not picking the right program and sabotaging your chances for more funds. Technically, you can get loan forgiveness via Student Loan forgiveness for teachers as well as Public Service Loan Forgiveness, but there is a catch.
According to the Federal Student Aid website, “you can potentially receive forgiveness under both the Teacher Loan Forgiveness Program and the Public Service Loan Forgiveness Program, but not for the same period of teaching service.”
What this means is that if you work for 5 qualifying years to bag a Teacher Loan Forgiveness, you can’t count any of the payments made during that time toward your required 120 qualifying payments for PSLF. This then adds 5 more years of payments if you wanted to pursue both programs.
Is PSLF a better option?
Looking at the cases discussed above, it would make be more logical to just start out pursuing PSLF rather than Teacher Loan Forgiveness. Not only is PSLF less strict in the area of teaching qualifications, but it also would erase your total student loan debt, not just a part of it.
A setback to PSLF, though, is that you need to make ten years of qualifying payments in order to be eligible. This means that you can only get this student loan forgiveness for teachers after 10 years.
What if you decided to stop teaching or change your career goals? A lot can change in the life of a teacher in the span of 10 years.
While Teacher Loan Forgiveness and PSLF are the most common programs relied on for loan forgiveness, teachers have other options. Selecting the right option will depend on your specific situation, with all programs including benefits for certain teachers.
Why PSLF is Usually Better than Teacher Loan Forgiveness
Imagine you’re a teacher with $50,000 in student debt. You’re a highly qualified math teacher at the high school level. You could get $17,500 in total forgiveness.
You earn $40,000 per year, have two kids, and a spouse who earns about the same amount of money as you do. The spouse has no student debt.
You could go for the Teacher Loan Forgiveness program. You’d get $17,500 forgiven in the first 5 years. Of course, you’d still have a balance leftover. Then you have to wait around for an extra 10 years to get your loans forgiven since you can’t double count service for both programs.
Instead, you could forgo Teacher Loan Forgiveness and just take advantage of PSLF from the start.
If you filed married filing separately for taxes and had inflation level raises on your $40,000 salary, your first Pay As You Earn (PAYE) payment as a teacher would be $74 a month.
Over 10 years, you’d pay a total of $10,123 under PSLF as a teacher.
But, if you did Teacher Loan Forgiveness, you would have $17,500 wiped away, but you’d still owe $50,000 plus whatever interest had accrued minus that forgiveness payment.
It’s obvious that you’d rather pay $10,000 over 10 years instead of $30,000 to $40,000 that’s left after Teacher Loan Forgiveness.
So, Teacher Loan Forgiveness is pretty useless if:
- You plan on having a career in teaching
- The debt you have is mostly federal student loans
- You owe more than $30,000
You know it’s pretty ironic is it that the program named for teachers is so useless for teachers compared to the more generically named PSLF program? Our student loan system deserves its own Shakespearean tragedy.
Other Loan Forgiveness Options for Teachers
Teachers searching for relief from student loans have other student loan forgiveness for teacher’s options available. Factors like where you live and what type of student loans you have play a big role in the programs available to you.
Federal Perkins Loan Cancellation
If you get accepted for Perkins loans, you can have your loans cancelled up to 100% through this program. To qualify, you must be:
- A special education teacher (including teachers of infants, children, toddlers, or youth with disabilities); or
- A teacher serving students of low-income families
- A math, science, foreign language or bilingual education teacher or be a teacher in another field that is determined to have a shortage of qualified teachers in your state.
Check the Federal Student Aid online database to know if your school of employment is classified as a low-income school.
Up to 100 percent of the loan may be cancelled for full-time teaching service, based on the number of years of service you have:
- 15 percent cancelled per year for the first and second years of service
- 20 percent cancelled for the third and fourth years
- 30 percent cancelled for the fifth year
Any cancelled amount includes interest accrued during that year of service.
You should contact the Perkins Loan servicer or the school that made the loan to learn more about the application for Perkins Loan Cancellation.
Income-Driven Repayment (IDR) plans
If you are a teacher but does not qualify for one of the listed student loan forgiveness for teachers listed above, there is another way to have your loan forgotten. You would need to move your student loan payments to one of the 4-eligible income-driven repayment options.
After paying for 20-25 years, any remaining student loan debt would be cancelled. As stated earlier, the 4 income-driven repayment plans are:
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
- Income-Contingent Repayment (ICR)
- Income-Based Repayment (IBR)
The disadvantage to going after this form of loan forgiveness is that there are potential tax implications when your loans are forgiven. Since forgiven loans through IDR is considered taxable income, you might encounter a large tax liability– do your research and weigh the good and cons before making any decisions on pursuing teacher loan forgiveness this way.
State-based loan repayment programs
Aside federal loan forgiveness programs, certain individual states have programs to help teachers pay off student loan debt. Programs differ from state to state, for instance, let’s look at 2 available state-based programs:
Illinois Teachers Loan Repayment Program
The Illinois Teachers Loan Repayment Program allows for teachers working in-state to enjoy up to $5,000 if they already gotten funds via the federal loan forgiveness program, but still have a balance remaining on their loans. Teachers have to meet their 5 year teaching obligation in an Illinois elementary or secondary school designated as a low-income school.
Tennessee Math & Science Teacher Loan Forgiveness Program
If you are a teacher performing your job at a Tennessee public school and are chasing an advanced degree in science or math, or a certification to teach science or math, you could be eligible for loan forgiveness via the Tennessee Math & Science Teacher Loan Forgiveness Program. For each year you get loan funding, you must be employed in a Tennessee public school system two (2) years.
For more information on this and other state-sponsored student loan forgiveness for teachers, check out the American Federation of Teachers’ searchable list of available state-based programs.
What is the best option for paying off your student loan debt?
With so many options available for student loan forgiveness for teachers, it’s a lot of information to understand and apply to discover the right package for your situation. Just as teachers are expert at educating students, the consultants at X11s are experts at educating our clients and working with them to discover the right payment options.
If the thought of saving money and getting out from under your teacher student loan debt sounds good, book your student loan consult today for FREE.