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There are several options for teachers seeking to reduce their federal student loan debt, including loan forgiveness and cancellation. For example, teachers may qualify for the Teacher Loan Forgiveness program, Public Service Loan Forgiveness (PSLF) program, and/or Perkins Loan Cancellation for Teachers. Also, there are state and local loan forgiveness, cancellation, and grant programs. We’ll discuss these options in more depth below.
Key Points
• Teachers with federal student loans may qualify for several student loan forgiveness programs, including the Teacher Loan Forgiveness, PSLF, and Perkins Loan Cancellation programs.
• The Teacher Loan Forgiveness program offers up to $5,000 or $17,500 after five consecutive years of teaching at a qualifying school.
• Some states and local organizations offer additional loan forgiveness or grant programs for teachers.
• Private student loans aren’t eligible for federal forgiveness, but refinancing can help reduce interest rates or monthly payments.
• Not all programs can be used concurrently, so it’s important to choose the option that best aligns with your eligibility.
Teacher Loan Forgiveness Program
Amount Forgiven
Up to $5,000 or up to $17,500 of the loan may be forgiven, depending on the subject area you teach.
Which Loans Might Qualify
Direct (or Stafford) Loans, both subsidized and unsubsidized, and Federal Family Education Loan (or FFEL) Program loans qualify for this program. For borrowers with Direct Consolidation Loans, the outstanding portion of the consolidation loan that repaid an eligible Direct Subsidized Loan, Direct Unsubsidized Loan, Subsidized Federal Stafford Loan, or Unsubsidized Federal Stafford Loan may qualify for Teacher Loan Forgiveness as well.
Qualifications
• Must teach at a low-income school — you can search for a school in this directory
• Must teach for five complete and consecutive academic years
• Existing student loans can’t be in default
Details
The maximum amount that can be forgiven under this program depends on the role and subject the borrower teaches. Teachers are eligible to receive up to $17,500 if they’re considered “highly qualified,” as defined by the program, and are full-time math or science teachers who have taught in an eligible secondary school. Teachers working in special education who meet specific requirements may also qualify to have $17,500 forgiven.
Teachers are eligible to receive up to $5,000 if they are a “highly qualified” full-time elementary teacher or a full-time secondary school teacher in all other subject areas.
What does “highly qualified” mean? It means that the borrower has a bachelor’s degree, full state certification as a teacher, and their certification or licensure requirements weren’t waived on an emergency, temporary, or provisional basis.
If you apply for Teacher Loan Forgiveness, you can’t also apply for PSLF for the same period. So, if you receive Teacher Loan Forgiveness, the five-year period of service that supported your eligibility won’t count toward PSLF.
How to Apply
Teachers aren’t eligible to apply until they have completed five years of service. After completing this requirement, borrowers can fill out a Teacher Loan Forgiveness Application. (It may be helpful to get acquainted with the application now, because it clearly explains who qualifies for what amount of forgiveness.)
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Public Service Loan Forgiveness Program
Amount Forgiven
The PSLF program forgives all of the remaining loan balance.
Which Loans Might Qualify
Direct Loans and Direct Consolidation Loans qualify for this program.
Qualifications,
• Must be in certain public sector jobs and employed full-time
• Must have made 120 qualifying payments (this takes 10 years if the borrower makes them consecutively)
• Payments must be made as part of an income-driven repayment plan
• Existing student loans can’t be in default
Details
Unlike with the Teacher Loan Forgiveness program, teachers don’t need to teach for a low-income school or within a particular academic subject when applying for the PSLF program.
To be eligible for this program, the borrower must be employed by the local, state, or federal government or work for certain nonprofit organizations that provide a qualifying public service — such as general education services.
To qualify for PSLF, borrowers must be on a qualifying payment plan, such as an income-driven repayment plan. With an income-driven repayment plan, borrowers are only required to pay a certain percentage (between 10% and 20%) of their discretionary income toward their monthly student loan payments.
Recommended: A Look Into the Public Service Loan Forgiveness Program
Sometimes, there’s confusion about whether forgiven loan balances are taxed. If a borrower meets the qualifications for PSLF, the forgiven amount won’t be taxed. For borrowers who are on an income-driven repayment plan and expect their loans to be forgiven after 20 or 25 years (but aren’t participating in the PSLF program), it’s possible that the forgiven amount will be taxed as income. To understand more about these tax nuances, consult a licensed tax advisor.
To qualify for PSLF, the 120 qualifying monthly payments don’t need to be consecutive. For example, if a borrower has a period of employment with a non-qualifying employer, they won’t lose credit for any prior qualifying payments made with a PSLF-approved employer.
While it’s possible to partake in both the Teacher Loan Forgiveness Program and PSLF, it’s not possible to do so concurrently. Your five years of service under the Teacher Loan Forgiveness Program don’t count toward your qualification for PSLF — you’ll have to qualify for PSLF under a different period of teaching service. Furthermore, payments made when working toward the Teacher Loan Cancellation Program won’t qualify for PSLF — you’ll have to make 120 additional qualifying payments for the PSLF program.
How to Apply
Borrowers may want to fill out the PSLF form with the PSLF Help Tool to be certain that their employment qualifies for the program. Once received by the Department of Education (ED), the borrower will receive a response telling them whether or not they qualify and, if they don’t, what steps are needed to become eligible. If the borrower does qualify, the ED will tell them how many qualifying payments have already been made.
Every time a borrower changes jobs, they’re advised to send in an updated PSLF form. Otherwise, borrowers will be required to submit a PSLF form for each of their previous employers when they apply for forgiveness.
Once a borrower has received notification that their PSLF form has been approved, they’ll need to continue making those on-time student loan payments. After making 120 payments, they can apply for forgiveness.
Perkins Loans Cancellation for Teachers
Amount Forgiven
Up to 100% of the loan may be forgiven in increments over a five-year period.
Which Loans Might Qualify
Federal Perkins Loans are eligible for this program. The Federal Perkins Loan program expired in September 2017, but loans disbursed through the program may still qualify.
Qualifications
Applicants must have a minimum of one year of teaching and at least one of the following requirements:
• Teach at a low-income school — search for a school in this directory
• Teach in a teacher shortage area, such as science, math, foreign languages, bilingual studies, or any other field of expertise considered to be a teacher shortage area by your state
• Teach special education, meeting certain qualifications
Details
Those who are eligible for the Perkins Loans Cancellation for Teachers may have all of their Perkins Loans forgiven. Cancellation happens in stair-step increments over five years. Here’s how the incremental forgiveness system works:
• 15% of the original Perkins loan balance is canceled per year for the first and second years of service
• 20% is canceled in both the third and fourth years
• 30% is canceled in the fifth year
In order to qualify for this program, an employee must work directly for the school system — qualifying is entirely contingent on position duties.
How to Apply
Each school has its own process, so borrowers should contact the school that administered the Perkins Loan.
State and Local Student Loan Forgiveness Programs
Some states offer loan forgiveness programs for teachers, especially for those who work in subject areas in high demand. One place to start your search for a state and local teacher loan forgiveness program is through this database created by the American Federation of Teachers.
What About My Other Student Loans?
So far, all of the programs we’ve discussed only apply to federal loans. What can be done if a borrower has other loans (such as private loans) that don’t qualify for federal teacher loan forgiveness? One option is to look into refinancing the student loans.
When a borrower refinances a student loan or multiple loans, they’re essentially paying those loans off with a new loan from a new lender. Ideally, the new loan has a more competitive interest rate than the existing loan(s), which could potentially save the borrower money over the life of the loan.
Borrowers can refinance both private and federal student loans, so this may be an option for teachers who don’t qualify for one of the federal forgiveness or cancellation programs.
If you refinance your federal loans, you’ll lose access to federal loan benefits such as access to the PSLF program and the Teacher Loan Forgiveness program. There’s always the option to refinance your private loans while keeping your federal loans separate.
The Takeaway
Teachers with federal student loans may be able to pursue loan forgiveness through programs such as the Teacher Loan Forgiveness and PSLF programs. Borrowers who hold Perkins Loans may also be able to pursue Perkins Loan Cancellation for Teachers. If you also have private loans, refinancing may be a good option, though, as stated above, refinancing federal loans disqualifies borrowers from government forgiveness programs.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
Can teachers qualify for both Teacher Loan Forgiveness and Public Service Loan Forgiveness?
Yes, but not for the same period of service. Time used to qualify for Teacher Loan Forgiveness doesn’t count toward the Public Service Loan Forgiveness (PSLF) program, so borrowers must meet each program’s requirements separately.
Do teachers need to work at a low-income school to qualify?
Teachers must work at a qualifying low-income school to be eligible for the Teacher Loan Forgiveness program. However, this isn’t necessary to qualify for the PSLF program, as long as the employer qualifies as a public service organization.
Are private student loans eligible for federal loan forgiveness?
Federal forgiveness programs only apply to federal student loans. Private loans aren’t eligible, but you might consider refinancing your private student loans, as you may be able to secure a lower interest rate to reduce your monthly payments.
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