What Is Teacher Loan Forgiveness?

What Is Teacher Loan Forgiveness? article image.

The Teacher Loan Forgiveness program is a federal program that enables teachers at approved schools to receive forgiveness for up to $17,500 of their student loan debt.

Teacher loan forgiveness provides an excellent benefit for teachers who qualify. But there are hurdles to clear before you can participate, and certain teachers don't qualify for the full benefit. If you're a teacher, here's what you need to know to take advantage of this program.

How Does Teacher Loan Forgiveness Work?

There's more than one way to achieve student loan forgiveness for teachers, but the Teacher Loan Forgiveness program is the most prominent. The program is designed for qualified teachers who have eligible loans and have taught at an eligible school or schools for at least five consecutive years.

This time requirement is half the time it takes to qualify for forgiveness under the Public Service Loan Forgiveness (PSLF) program, which is another way teachers can achieve forgiveness on their student loans.

The amount of student loan debt that you can get discharged under the Teacher Loan Forgiveness program depends on the subject area you teach and the school level. The $17,500 maximum benefit is reserved for select math, science and special education teachers, while teachers who teach other subjects can receive up to $5,000.

Who Qualifies for Teacher Loan Forgiveness?

As with other student loan forgiveness programs, there's a lot of fine print you'll want to understand before you submit your application. Here's how to tell if you meet the basic eligibility requirements:

  • You have an eligible direct subsidized Loan, direct unsubsidized loan, a subsidized federal Stafford loan or an unsubsidized federal Stafford loan.
  • You work in an elementary school, secondary school or educational service agency that serves low-income students.
  • You must not have held an outstanding balance on direct loans or any Federal Family Education Loans (FFEL) as of October 1, 1998. Additionally, teacher loan forgiveness candidates must not have held a direct loan or FFEL before October 1, 1998. In order to qualify for forgiveness, you must first pay off loans borrowed before this date.
  • You must meet the qualifications of a qualified teacher, which include attaining at least a bachelor's degree and receiving full state teacher certification. Plus, you cannot have had certification or licensure requirements waived on an emergency, temporary or provisional basis.

Note that if you've defaulted on a college loan, you won't be eligible for teacher loan forgiveness until arrangements have been made to repay the loan, suitable to the approval of the student loan provider.

If you're a teacher who did not complete a full school calendar year of instruction, the year may ultimately count toward your teacher loan forgiveness under the following conditions:

  • You finished at least half of the qualifying school's academic year.
  • Your school or educational service agency agrees that the contract requirements for the academic year were completed, and you're in good standing.
  • You can still qualify for a teacher loan forgiveness if you spent the time away from school on at least a half-time basis, in a qualified area of education instruction (usually the course of study category the teacher is instructing at a qualified school or educational service agency).
  • You can also qualify for loan forgiveness with a medical or health condition recognized under the Family and Medical Leave Act of 1993, or if you're a member of the U.S. armed forces or a U.S. military reserve member called for duty for more than a 30-day period.

There are also other requirements based on where you teach and whether or not you're new to the profession. Read more about the eligibility requirements on the Federal Student Aid website.

Perkins Loans Teacher Forgiveness Programs

Teachers are also eligible for the federal Perkins Loans forgiveness program. You can can have Perkins loans forgiven or reduced if you meet certain guidelines:

  • Teach at a school that serves students from low-income families.
  • Be a special education teacher.
  • Teach in an area where the state has a shortage of qualified teachers, such as math, science, foreign languages or bilingual education.

Perkins loan forgiveness can eliminate a substantial amount of student loan debt—up to 100% of your loan. The program is based on an incremental model, with the loan forgiven steadily over a five-year basis. Perkins loan forgiveness provides teachers loan relief in the following incremental fashion:

  • Year 1: 15% of a Perkins student loan is forgiven.
  • Year 2: Another 15% of a Perkins student loan is forgiven.
  • Year 3: 20% of a Perkins student loan is forgiven.
  • Year 4: Another 20% of a Perkins student loan is forgiven.
  • Year 5: The remaining 30% of the Perkins student loan is forgiven.

One thing to keep in mind if you're currently a student or considering going back to school is that Perkins Loans are no longer available as of September 2017.

How to Apply for Teacher Loan Forgiveness

If you believe you qualify for the Teacher Loan Forgiveness program, you'll need to submit an application to each of your loan servicers after you've taught for at least five years. The chief administrative officer at your school or educational service agency will certify on the application that you've met the requirements.

If you have Perkins loans, they're administered by colleges and universities themselves instead of the Department of Education. So you'll need to contact the school where you received the student loan to process your application.

Other Ways to Get Help With Student Loans

There are two other forgiveness programs you can take advantage of as a teacher: Public Service Loan Forgiveness (PSLF) and state-sponsored programs. If you're working toward forgiveness but struggling to make your payments right now, you can also get on an income-driven repayment plan.

Public Service Loan Forgiveness

Under PSLF, you can receive forgiveness for the remaining balance of your federal direct student loans after you've made 120 qualifying on-time payments. To qualify, you'll need to work for a government agency or an eligible not-for-profit organization—schools fall under the government umbrella.

It's possible to get forgiveness through both the PSLF and Teacher Loan Forgiveness programs, but not for the same period of service. So if you count five years toward teacher loan forgiveness, payments made during that time don't count toward the 120-payment requirement for PSLF.

Because the Teacher Loan Forgiveness program doesn't offer a lot to most teachers, it may be better to work toward forgiveness under PSLF, especially if you have a large balance.

State-Sponsored Forgiveness Programs

Many states offer separate forgiveness programs that can help you pay down your student loan debt. The American Federation of Teachers union offers a searchable database on its website to help you find out if your state offers a program and what it entails.

Income-Driven Repayment Plans

The Department of Education offers four income-driven repayment options. Depending on the type of loans you have and your financial situation, you may qualify for one or more of these plans.

Income-driven repayment plans reduce your monthly payment to as low as 10% of your discretionary income (this is any income beyond 150% of the applicable federal poverty guideline). They also extend your repayment term to 20 or 25 years. While that's a long time to be in debt, you'll be forgiven any balance that remains at the end of the repayment schedule.

Just keep in mind that under income-driven repayment forgiveness, the discharged amount will be considered taxable income.

Other Options

A couple other options the federal government provides if you're struggling are forbearance and deferment. Eligibility requirements can vary, but if you qualify, you may be able to pause your monthly payments for a few months or more.

It's important to note, however, that most student loans continue to accrue interest during forbearance or deferment, which means your balance will be larger when the payment hiatus ends.

If a forgiveness program isn't possible for you, refinancing your student loan could net you a lower interest rate and lower monthly payments. Refinancing could be especially helpful if you're a teacher with a blend of public and private student loan debt, as refinancing multiple loans with a single lower interest rate can significantly curb your student loan debt.

Make Payments on Time to Protect Your Credit Score

If you're having a hard time paying your student loan bill every month, it may be tempting to skip a payment or two while you get back on your feet financially. However, if you let your student loans go 30 days or more without payment, the lender or servicer can report that to the credit bureaus, which is likely to damage your credit score.

A low credit score will make it more difficult to get credit in the future, including student loan refinancing. Check your credit score often to always have an idea of where you stand, and also contact your lender or servicer if you're having trouble. It's in both your best interest to work toward a solution that ensures payment and doesn't hurt your credit.