Loan forgiveness is a program for eligible borrowers where some amount of the remaining loan or the entire amount of the remaining loan is forgiven. They no longer have to make payments for the forgiven amount.
If you are a teacher who is currently making repayments for your student loan(s) or are about to start your repayments, you should know that your loan could be eligible for forgiveness. The student loan forgiveness programs for teachers have several conditions and eligibility criteria. Some of these criteria could be complicated and confusing to understand.
In this article, we will break down all the information you need to know about federal student loan forgiveness programs for teachers. For private loan forgiveness programs navigate to the later section of this article.
List of Contents
The following list consists of different topics that will be covered in this article.
You may use this list to navigate to different sections as per your desire.
What is Student Loan Forgiveness?
Student Loan Forgiveness is forgiveness given by the U.S government to the borrowers of federal student loans. When a borrower is forgiven, it means that they are no longer expected to make repayments for the forgiven amount, whether that is a portion of the remaining loan or the entire remaining amount. Moreover, the forgiven amount will not be considered as a taxable income.
To be eligible for a forgiveness program, borrowers must be aware that some of the programs require you to make payments under specific repayment plans where you make eligible monthly payments for a stipulated period of time. Delinquencies, late payments, and defaults could result in ineligibility for forgiveness under certain programs.
Loan Forgiveness for Teachers
In 2017, it was reported that the average Student Loan debt is around $37,000. Despite this high average debt, the average starting salary for K-12 teachers is just $39,000. The idea that teachers are exploited with low wages, that they have always been underpaid, is a cause for concern even till today.
Student loan forgiveness programs could eliminate the many financial stresses that you may bear as a teacher. If you set up your loan repayment plans and monthly payments to be eligible for forgiveness in the future, you no longer have to worry about the total amount of loan that is in your account. Instead, you have to strictly follow these repayment plans and most importantly, make your on-time monthly payments.
The detailed process and application procedures will be discussed later in this article.
The programs through which Federal Student Loans of eligible teachers can be forgiven are as given below.
Teacher Loan Forgiveness (TLF) Program
Public Service Loan Forgiveness (PSLF) Program
Temporary Expanded PSLF (TEPSLF) Program
Teacher Loan Forgiveness Program (PSLF)
This program is for teachers who have worked full-time for five consecutive years. They also have to qualify for all the eligibility criteria to receive forgiveness for the eligible loans, all of which are mentioned below.
Employed full-time for five consecutive, complete academic years as a highly qualified teacher
Employed at an educational service agency or at a low-income school
Eligible loan was made before the end of the qualifying five years
At least one of the five qualifying years must be after the academic year 1997-1998
No other outstanding balance on Direct Loan or FFEL as of 1st Oct. 1998 or on the day of obtaining the eligible loan.
Your academic year may still be considered completed if your employer confirms that you have accomplished your contract requirements for the purposes of salary increases, tenure, and retirement even if you completed only one-half of the academic year because-
You returned to continue postsecondary education, in an area directly related to the performance of the teaching, or
You were called for active duty as a member of a reserve component of the U.S. armed forces, or
You had a condition covered under the Family and Medical Leave Act, 1993
Who is a highly qualified teacher?
Has a bachelor’s degree
Full state certified teacher, passed a state teaching licensing exam, or meet requirements set in the state's public charter school law if you are a teacher at a public charter school
Qualify on all of the following additional requirements below whenever applicable
For new teachers in Elementary School - passed a rigorous state test
For new teachers in Middle or Secondary School - passed a rigorous state academic subject test, completed an academic major, a graduate degree, course work equivalent to an undergraduate academic major, or completed an advanced certification or credential for each of the subjects to be taught.
For old teachers in Elementary, Middle or Secondary School - meet the same requirements as a new teacher, or passed a high, objective, uniform state standard of the evaluation set by the state which is made public upon request.
Direct Subsidized Loans
Direct Unsubsidized Loans
Direct Consolidation Loans - only the outstanding portion of the amount used to repay Direct loans.
Federal Family Education Loan
Direct PLUS Loans of any kind are not eligible for forgiveness under this program.
The upper limit of the forgiveness is -
Up to $17,500 for highly qualified mathematics or science teachers in secondary school
Up to $17,500 for highly qualified special education teachers (at either elementary or secondary level) who provide special education to children with disabilities
Up to $5,000 for highly qualified elementary or secondary school teachers who teach the subject(s) other than mathematics and science
If you have loans under both the Direct Loan and FFEL Program, your upper limit is increased to $17,500 + $5,000, i.e. $22,500
If you have defaulted on your loan, you need to make acceptable repayment arrangements to be eligible for this forgiveness program.
The application process for the Teacher Loan Forgiveness Program is fairly simple -
Step 1 - Download the TLF application form from the Federal Student Aid website.
Step 2 - Fill in your details in the “TO BE COMPLETED BY THE BORROWER” sections.
Step 3 - Request the Chief Administrative Officer(CAO) of the educational service agency or school where you qualify for the forgiveness program to fill the “TO BE COMPLETED BY CAO” section for certification.
Step 4 - Submit the completed form to your loan servicer. If you are applying for forgiveness for more than one loan under different servicers, fill separate forms for each loan and submit them to each corresponding servicer.
Public Service Loan Forgiveness Program (PSLF)
This program is for anyone who worked/works for the government or a not-for-profit organization with 120 qualifying monthly payments under a qualifying repayment plan for the eligible loans. Ultimately, teachers who were employed or are employed by such qualifying employers may avail of this program. Unlike TLF Program, PSLF program forgives the entire remaining loan balance.
Teachers who are planning to apply for this forgiveness program must qualify for the following eligibility criteria.
1 - Has worked for a Qualified Employer
The following criteria will help you determine if your employers are/were qualified.
Any government organization of the tribal, local, state, or federal level.
Any not-for-profit organization under Section 501(c)(3) of the Internal Revenue Code who are tax-exempt or who are not tax-exempt but provide qualifying public services
AmeriCorps or Peace Corps - worked as a full-time volunteer
Note that you are required to work for such employer at the time you submit your application for the forgiveness or during the time you receive the forgiveness.
2 - Has worked full-time
Your work is considered full-time if it qualifies one of the following criteria, whichever is higher.
Your employer’s definition of full-time
30 hours a week
If you have worked under multiple qualifying employers, the cumulative working hours for one week must be 30 hours or more.
Note that for a not-for-profit organization, time spent for proselytizing field works do not count as working hours.
3 - Has Eligible Loans
The following loans are considered to be eligible for this program.
Any non-defaulted loans under the William D. Ford Federal Direct Loan (Direct Loan) Program
Any Direct Consolidation Loans which were meant to pay off loans under the FFEL Program or Federal Perkins Loan
Note that for any loan consolidated under Direct Consolidation Loan, payments done before consolidation will not be counted into the qualifying payments.
4 - Has made 120 qualifying monthly payments
Your monthly payment will be considered if they fulfill the following criteria.
Payments made under a qualifying repayment plan
Full amount payments as shown in the bill made within 15 days after the due date
Note that these 120 payments need not be consecutive. But any payment that was done before 1st Oct. 2007 will not be included under qualified payment.
Also, only payments made for due amount are considered qualified. This excludes any payments made during the grace period, deferment or forbearance period, or payments made while loan has in-school status.
However, if the US Department of Defense has made lump-sum payments on behalf of borrowers towards their student loans, this may be considered qualified as more than one payment.
5 - Has Qualifying Repayment Plan
To avail of this program, it is mandatory that you are making payments under any Income-Driven Repayment Plans. Details of these plans can be found in our previous articles.
Note that the 10-year Standard Repayment Plan may be a qualified repayment plan but by the time you make 120 monthly payments, you would have already paid off your loan without any loan balance to be forgiven.
Qualifying Public Services
For employers who are not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, they are still included in the qualifying employer if the organizations’ primary service is any one of the following.
Public interest law services
Early childhood education
Public service for individuals with disabilities
Public service for the elderly
Public library services
Other school-based services
Employers that not qualify for PSLF
Partisan political organizations
For-profit organizations (including for-profit government contractors)
Government contractors: For-profit government contractors
The application process for PSLF Program is fairly simple. It includes a one-time submission of Application Form and the submission of Employment Certificates.
PSLF Application Form
After you completed the 120 qualifying monthly payments you will not be automatically considered for the program. You have to initiate the application process yourself. Follow the steps given below.
Step 1 - Download the PSLF application form from the Federal Student Aid website.
Step 2 - Fill all your details under the “to be completed by borrower” section.
Step 3 - Request your employer to fill all the necessary details under the “to be completed by employer” section.
Step 4 - After making sure that all necessary details are filled and accurate, send the application form by mail to the following address.
U.S. Department of Education
P.O. Box 69184
Harrisburg, PA 17106-9184
PSLF Employment Certificate
The employment certificates are used by the US Department of Education to determine which payment you made under your current employer can be credited to your qualifying payments. It has to be submitted every year or every time you change employer. If these submissions are not done periodically, it has to be done at the time application.
Follow the steps given below.
Step 1 - Download the PSLF Employment Certificate form from the Federal Student Aid website.
Step 2 - Fill all your details under the “to be completed by the borrower” section.
Step 3 - Request your employer to fill all the necessary details under the “to be completed by the employer” section.
Step 4 - After making sure that all necessary details are filled and accurate, send the application form by mail to the following address.
U.S. Department of Education
P.O. Box 69184
Harrisburg, PA 17106-9184
The Education Department will contact you if the certificate is approved, need modification or rejected. If rejected, you may be given a chance to provide additional information that may help your employment certificate qualify.
Temporary Expanded PSLF (TEPSLF)
TEPSLF is an extension of PSLF for borrowers whose PSLF applications were rejected due to an ineligible repayment plan. In case you have submitted an application for PSLF and got rejected as a result of having made your 120 monthly payments under repayment plans other than the Income-Driven Repayment(IDR) Plans, you may be reconsidered for forgiveness.
Under the Consolidated Appropriations Act, 2018 a limited funding has been made to forgive the rejected PSLF application on a first come first serve basis. This program will be ceased once its funds exhaust.
1 - Direct Loans
Direct Loans without defaulted status are the only loans that will be eligible for TEPSLF program. Any other loan including Direct PLUS loans, FFEL and Perkins Loans will not be eligible for the program.
2 - Denied for PSLF Program
You must have had your previously submitted application for PSLF Program. The status of your application could either be rejected or yet to be announced.
3 - Qualified Payments
You must have made 120 monthly payments among which some or all of them were made under a repayment plan other than the IDR Plan.
4 - Worked for Qualified Employers
You must have worked for at least 10 years under a qualified employer (same as qualified employers under PSLF Program) with an approved employment certificate.
5 - 120 Qualified Monthly payments
Simultaneously making the qualifying 120 monthly payment as per the new TEPSLF requirements during the 10 years of work mentioned above.
6 - Other requirements
12 months prior to your application, you must have made payments according to the same requirements under PSLF Program. Besides that, your latest payment must be equal to or greater than the amount of payment you would have made under IDR Plan.
The application process for TEPSLF is also quite simple. All you need to do is send an e-mail to the FedLoan Servicing mentioned below. In the email, you must request the Department of Education to reconsider your eligibility for PSLF. You must include your name and date of birth.
E-mail - TEPSLF@myfedloan.org
Note that it is mandatory to have previously applied for PSLF Program but you do not have to wait for it to be rejected. You may request for TEPSLF right away.
After Request is Sent
Once you send the request by e-mail, you have to wait for FedLoan Servicing to notify you whether your request is accepted, forwarded to the Department of Education for further processing, rejected, or requires additional information.
Alternative to Forgiveness
If you have found yourself ineligible for the forgiveness programs that we have mentioned here, that is not the end of it. There are other options that can help you ease your financial burden that your student loan(s) is giving you. Consider the following options and choose the one that is best suited for your needs.
1 - Loan Consolidation
For anyone juggling to pay off multiple loans at once, it is advisable to consider loan consolidation. Under this process, two or more loans are combined to one big loan with a lesser interest rate. You have to make sure that your new loan is beneficial for you in the long term. Please approach your loan servicer to discuss whether your current loans can be consolidated and find the best options you have.
Before going to your servicer, you need to familiarize yourself with the detailed article that we have prepared for you which includes everything you need to know about loan consolidation.
2 - Loan Deferment and Forbearance
Deferment and forbearance allow you to temporarily stop loan payments. Your eligibility for deferment or forbearance will be based upon your current financial situation. Please approach your loan servicer to discuss whether you can receive a deferment or forbearance for your current loans and find the best options you have.
Before going to your servicer, you need to familiarize yourself with the detailed article that we have prepared for you which includes everything you need to know about loan deferment and forbearance.
If you are a teacher with any outstanding student loans, contact your respective loan servicer to make sure that your loan is eligible for forgiveness. Make sure you choose the right program that is most beneficial for you in the long term.
It is possible to combine the TLF program with the PSLF program. To do so you must make sure that you are eligible for the TLF program after 5 years of repayments and change your loan repayment plans to be eligible for PSLF program after the next 10 years. This would take 15 years in total.
Should you combine TLF and PSLF? Which one is better?
It is advisable for you to consider the combination only if you believe that your job after 5 years may change, i.e. there is a good chance that you might quit the job or change it for a reason, or if your financial situation is forcing you to take the quicker-but-lower amount of forgiveness.
If that is not your case, and it is highly likely for you to be teaching for the next 10 years, there is no logical explanation for you to take the lower amount of forgiveness first, and wait for 15 years to be off of your debt when it can be done in 10 years.
What about Private Student Loans?
So far we have discussed forgiveness programs for federal student loans. For teachers who have private student loans, there are many forgiveness programs that we have thoroughly discussed in another article. If you are interested in those, please check them out as well.
Are student loans forgiven for teachers?
Yes, Teacher loan forgiveness program avails up to $17,500 in loan amounts forgiven on your Direct or FFEL Subsidized or Unsubsidized Loans after 5 complete and consecutive years of teaching at a qualifying school. Other teachers who are eligible can also qualify for up to an amount of $5,000. PLUS and Perkins loans are ineligible for forgiveness through this program.
Are teachers eligible for PSLF?
Yes, teachers are eligible for the Public Service Loan Forgiveness program as is it a more broader category for loan forgiveness in comparison to the Teachers loan forgiveness program which is more inclusive in nature as it includes strict specific requirements for qualifying for the forgiveness program.
How long does it take to get approved for teacher loan forgiveness?
The loan holder gets a hold for 60 days on the application form when it receives your completed application to when it transfers it to the guarantor. This is then approved or denied based on its eligibility for acceptance and can take anywhere up to 45 days from arrival.
Do teachers get help with student loans?
Most of the time loan forgiveness for teachers require you to work in a low-income school. Although if you aren't qualifying for the student forgiveness, you could consider student loan refinancing as this would be able to get you a lower interest rate and more manageable payments and better or even longer-term options.
When should I apply for teacher loan forgiveness?
The best time to apply for teacher loan forgiveness is after 5 years of teaching in a qualifying school and completing the 5 years consecutively is a necessity.
How often can I apply for teacher loan forgiveness?
You are eligible to submit and should do the same every year for the 5 years that you are working as a teacher in an eligible school and when you finish the 5 years you apply for the forgiveness program and then you will be approved for an "administrative forbearance" which lasts for a period of 60 days from the day your completed application is received by the concerned authorities.
Do substitute teachers qualify for student loan forgiveness?
If the substitute teacher is able to get the school authorities where they worked to mention that they worked there for a period of 5 years completely and consecutively and worked there as a full-time employee. Unless these terms can be met then they cannot qualify for the forgiveness program.
Is teacher loan forgiveness considered taxable income?
Currently, under the Internal Revenue Service or IRS rules, any loans that are forgiven under these programs can be considered as taxable income. This means that you could face a pretty large fine in the form of a tax bill when your loans are approved for forgiveness.
Are state employees eligible for student loan forgiveness?
The Public Service Loan Forgiveness program is a federal program which forgives the federal student loans that borrowers have when they have been employed for full time (>30 hrs per week) in an eligible federal, state or local public service job including teaching faculties or 501(c)(3) non profit jobs who have made 120 eligible payments.
How much tax do you have to pay on forgiven debt?
Whatever is the amount of the loan that is forgiven will be counted or taken as taxable income.
For example, if you had $20,000 in credit card debt and you managed a deal with your creditor to settle the debt by paying about $10,000, then the remaining $10,000 can be considered as taxable income. Banks, credit unions and other creditors are required to send debtors and the IRS 1099-C notices showing the amount of the debt that was forgiven.