Student loan forgiveness programs for teachers

Wonder what teachers have in terms of loan forgiveness programs, eligibility, limits for loan forgiveness, application process. Find out in this article.

Posted by Sharan Kumar on 26th March 2019


What is Loan Forgiveness?

Loan Forgiveness is a method of finance through which a borrower (the individual who took out the loan) gets his/her loans forgiven in the sense is no longer required to repay all or a portion of the loan which includes the principal and interest that was owed on the student loan.

Basics of loans

Principal - It is the total amount of money that is borrowed inclusive of any interest that has been capitalized.

Interest Capitalization - The inclusion of unpaid interest to the principal amount of your loan.

Deferment - The temporal postponement of the payments on a loan.

Forbearance - A temporal suspension of the timely payments that were required to be made on the loan.


Table of Contents

Numbers

Topics

1

What Is Loan Forgiveness?

2

Do teachers qualify for student loan forgiveness?  

3

Which teaching careers are eligible?

4

Federal Loan Repayment Options

5

Federal Loan Forgiveness Programs

6

How much loan forgiveness can I receive?

7

How do I know if I’m a 'highly qualified teacher'?

8

How do I apply?

9

Other conditions regarding the Loan cancellation or discharge

10

Private Loans for Teachers

11

Teacher loan forgiveness program FAQs


Do Teachers qualify for student loan forgiveness program?

Yes, definitely. Regardless of the nature of your involvement in the teaching field. If you've already been in the classroom for a while you should know that the education requirements for teachers are at least a couple of years in school.

Thankfully there are many options for federal student loan forgiveness for teachers to get some of the debt off their backs and many of the programs cater just to the relief of the teachers.

Statistically speaking since Americans in the whole hold a total debt in student loans of over $1.5 trillion as of the year 2018, but there are a various number of programs for loan forgiveness to deal with them.

Teacher student loan forgiveness programs

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Which teaching careers are eligible?

The primary requirement of being eligible for student loan forgiveness programs for teachers is that your job must match that of the federal student aid's definition of a teacher. This means that the federal government mentions that a teacher is that person has the responsibilities as follows according to various programs. We shall discuss in detail about all of these programs to get a better understanding for you to make your choice.

Teacher Loan Forgiveness Programs -

A teacher is defined as a person that provides direct classroom education or teaching, or a classroom type of teaching in a non-classroom environment, which also includes the special ed teachers.

Always keep in mind that there is no sure shot way to tell whether you will get your loan forgiven or not, but there is a very good chance for you to be eligible if you work in a certain set of schools for a predetermined period of time, although this differs from each forgiveness program to program. Since each of these programs has its own set of eligibility terms, you can get ahead of the curve by doing some research and making sure you are ready for whatever is to come.

Federal Student Loans Eligible for Forgiveness

Since federal student loans are some of the most easily accessible loans in any field for students who require them. In respect to these loans regarding student loan forgiveness for teachers, there are various types of loans that are available through the federal government. Regarding this, the federal student aid office of the U.S. Department of education has a couple of loan programs.

Let's have a look -

The William D. Ford federal direct loan (Direct Loan) program -

Since this is the largest federal student loan program where the U.S. Department of Education is your primary lender. There are primarily 4 different types of Direct Loans that are available.

Direct Subsidized Loans that undergrads are eligible for those who prove the necessity of financial help to cover the costs of higher education at a career school or college.

Direct Unsubsidized Loans for undergrads, grads and professional students who are eligible and are not required to demonstrate financial need.

Direct PLUS loans are for those graduate, professional students and for the parents of the dependent undergrad students to assist them in paying for the educational expenses incurred that are not covered by other financial aid.

Direct Consolidation Loans are those loans which allow you to consolidate all your current federal student loans which are found eligible into a single loan provided by a single servicer so as to help reduce the burden of multiple loan servicers and payments and have a single loan servicer and single payment to be made monthly.

Eligbility for teacher loan forgiveness programs

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The Federal Perkins loan program -

This is now a discontinued program. This program was provided by the schools where the undergrad and grad students studied for those who demonstrated exceptional financial need and the school would be the lender in such a situation.

The Federal Family Education Loan (FFEL) program -

This Discontinued program that was made to students by the banks and financial institutions. There have no longer been any new FFEL program loans made as of the 1st of July, 2010. Although this program no longer exists, FFEL Loans are still eligible for forgiveness. Have a look below to find out more.


Federal Loan Repayment Options

But before you get a loan forgiveness program, you should consider how you wanna pay your loans back. Taking into consideration your financial situation, there are multiple avenues through which you may begin making your repayments.

Have a talk with your loan servicer to discuss the details of each, and also make sure your repayment plan aligns with the loan forgiveness program that you want to consider getting. As mentioned by the federal student aid, these repayment options are made available for every student who is out in the teaching field.

1 - Standard Repayment plan -

This is usually a 10-year plan for all borrowers to repay their loans with a fixed monthly payment.

Loans that are eligible are -

  • Direct PLUS Loans

  • FFEL PLUS Loans

  • Direct Subsidized Loans

  • Direct Unsubsidized Loans

2 - Graduated Repayment Plan -

These repayments plans begin with a low amount and increase every 2 years for a total time period of 10 years and it also makes sure that the highest monthly payment does not exceed 3 times the amount compared to any other monthly payment.

Loans that are eligible are -

  • Direct PLUS Loans

  • FFEL PLUS Loans

  • Direct Subsidized Loans

  • Direct Unsubsidized Loans

3 - Extended Repayment Plan -

This is one of the longer repayment plans that lasts for a period of about 25 years and can be either a fixed payment or a graduated payment scheme. But to qualify you must have at least an amount of $30,000 in Direct loans or FFEL Loans.

Loans that are eligible are -

  • Direct PLUS Loans

  • FFEL PLUS Loans

  • Direct Subsidized Loans

  • Direct Unsubsidized Loans

4 - Revised Pay As You Earn Repayment (REPAYE) Plan -

It is a loan repayment plan for the Direct Loan program borrowers. Monthly payments will be of the amount of about 10 percent of your discretionary income, in the instance that you are married, both parties' loan debt shall be taken into consideration.

Loans that are eligible are -

  • Direct Subsidized Loans

  • Direct Unsubsidized Loans

  • Direct Plus Loans made to students

  • Direct Consolidation Loans which does not include PLUS loans (Direct or FFEL) made to parents

5 - Pay As You Earn Repayment (PAYE) Plan -

To be eligible you are required to be a Direct Loan Program borrower who

  • Made a loan out on or after The 1st of October 2007

  • Received a disbursement of a Direct loan on or after 1st of Oct 2011

  • Has a required payment amount that is initially under the 10-year standard repayment plan.

  • Your max monthly payments will be equated to 10 percent of your discretionary income.

  • And your spouse's income or loan debt will be taken into consideration if your tax returns are filed as a joint tax return. Also, you must have high debt in comparison to your income.

Loans that are eligible for this are -

  • Direct Subsidized Loans

  • Direct Unsubsidized Loans

  • Direct Plus Loans made to students

  • Direct Consolidation Loans which do not include PLUS loans (Direct or FFEL) made to parents

6 - Income-Based Repayment (IBR) Plan -

This is a plan for those Direct loan program and FFEL program borrowers who have a payment plan that falls under the 10-year standard repayment plan. The monthly payments will be 10-15% of your discretionary income and if you're married, your spouse's income will be taken into consideration when you both file your tax returns as a joint tax return. Your debt must also be high in comparison to your income.

Loans that are eligible for this are -

  • Direct Subsidized Loans

  • Direct Unsubsidized Loans

  • Subsidized Federal Stafford Loans

  • Unsubsidized Federal Stafford Loans

  • Direct or FFEL Plus Loans made to students

  • Direct or FFEL Consolidation Loans which do not include PLUS loans made to parents

7 - Income-Contingent Repayment (ICR) Plan -

This repayment plan is for those who belong to the Direct Loan Program Borrowers.

In this plan, your payments will be lesser than -

20% of the income that you receive that is discretionary.

The amount you would eventually pay over the next 12 years on a repayment plan with adjustment to your income.

Loans which are eligible for this payment plan are -

  • Direct Subsidized Loans

  • Direct Unsubsidized Loans

  • Direct PLUS Loans made to students

  • Direct Consolidation Loans (including Direct Consolidation Loans made after 7/1/06 that repaid PLUS loans made to parents)


Federal Loan Forgiveness Programs

The federal government has created a couple of options for the sake of students to help them get rid of a part of their student loans if they are found to be eligible.

All of the forgiveness programs are solely dependent on a set period of time and also your qualified payments which have been made on the same, so having a good understanding of these points will save you the trouble of having missed your chance at a point where you could have gotten the eligibility for the loan forgiveness.

So keep in mind the points we are about to discuss to see if you qualify or if you might have missed a couple of chances so we can get you back on the right track.

Federal loan repayment programs

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Repayment Plan Loan Forgiveness

With respect to your repayment plan that you picked and or had the eligibility for, there are options of student loan forgiveness that our usual standards of the same. These plans are made in such a way to forgive your outstanding balance after a specific period of time, although you may be required to pay income tax on the amount that is forgiven.

Public Service Loan Forgiveness (PSLF) Program

This is one of the forgiveness programs that forgive the remaining balance on an employee's Direct Loans who has worked successfully at a public service sector and made successfully 120 qualifying monthly payments. With no history of default on them, and working under a qualified employer.

To under what a qualifying payment and a qualifying employer mean -

Any payment that is made after the 1st of Oct, 2007, In full amount being made no more than 15 days after the due date is considered as a qualifying payment.

Whereas a qualifying employer has a few more criteria -

  • Any government organization at any level such as federal, state or local and even tribal.

  • Non-Profit organizations which have been exempted from tax collection under Section 501(c)(3) of the IRC.

  • Any other types of Non-Profit organizations which are not tax exempted under the Section 501(c)(3) of the IRC, as long as their primary area of service revolve around certain types of qualifying public services.

  • Serving as a full-time volunteer at the AmeriCorps or the Peace Corps.

The loans availed through the FFEL program or the Federal Perkins Loan Program do not qualify, as these loans do not come under the category of Direct Loans, But they can become eligible if they are consolidated into a Direct Consolidation Loan. Any payments that were made to the FFEL program or the Perkins loans before the Consolidation will not be considered as qualifying payments for the 120 qualifying loan payments for the Public Service Loan Forgiveness program.

Note -

In this situation to become eligible for the PSLF, you are required to make 120 qualifying loan payments before you become eligible for the Loan Forgiveness, hence it would take you at least 10 years of qualifying payments to become eligible and for you to be able to apply and successfully receive the PSLF. If you do plan on applying for the same.

You should fill out and submit the Employment Certification for Public Service Loan Forgiveness form (Employment Certification Form) every year or when you change employers so you are notifying the federal government to keep a track that you are making qualifying payments for the PSLF.

Send over the filled out form, with your employer's certification to the FedLoan servicing, i.e. The U.S. Department of Education's federal loan servicer for the PSLF Program.

Address - 

U.S. Department of Education

FedLoan Servicing

P.O. Box 69184

Harrisburg, PA 17106-9184

You could also fax it in at the number given below

717-720-1628

If you have already made the switch in loan servicers to FedLoan then you have the option to upload your employment certification form directly on their website.

Federal Teacher Loan Forgiveness

The federal government offers another specific loan forgiveness program aimed at the teachers looking to pay off their student loans called the teacher loan forgiveness program. In this program, one may receive up to a max amount of $17,500 in forgiveness on Direct Subsidized and Unsubsidized loans and their subsidized and unsubsidized federal Stafford loans in exchange for five consecutive years of full-time teaching.

As the federal student aid office states, in respect to the teacher loan forgiveness, if you possess a direct consolidation loan or a federal consolidation loan, you may become eligible for the forgiveness of the remaining portion of the consolidated loan that was used to repay an eligible Direct Subsidized Loan, Direct Unsubsidized Loan, Subsidized Federal Stafford loan or Unsubsidized Federal Stafford loan.


How much loan forgiveness can I receive?

The max amount of loan forgiveness that you may receive will be dependent on the subject area that you teach, if you have loans in the Direct loan program and the FFEL program, a total combination of the two loan forgiveness of $17,500 + $5,000 can be granted for each of them respectively.

To be eligible to receive up to $17,500, you must -

Be considered a highly qualified science or math teacher who has taught full time to students at a secondary school.

Be a highly qualified Special Ed teacher with the primary responsibility of providing special education and instructions to students with disabilities.

It should correspond to your area specialties and corresponds to the training you've received in that area to show the skills and knowledge/skills in the content areas with respect to the curriculum you teach with regard to elementary and or secondary school students.


Basic Requirements for Teacher Loan Forgiveness

As laid out by the U.S. Department of Education, there are the requirements for being eligible -

  • You must be clear of any outstanding balance on any Direct Loans or FFEL programs as of the date 1st Oct 1998 or if the loan was obtained after the date of 1st Oct 1998.

  • You must be full time and highly qualified teacher who has taught for 5 or more complete and consecutive years, of which at least one of the years must be past the academic year of 1997-98.

  • You must be employed at an elementary school, secondary school or educational service agency serving low-income students.

  • Your loan must be made before the end of the 5 years of academic qualifying teaching services.


How do I know if I’m a 'highly qualified teacher'?

To be considered a highly qualified teacher, you should -

  • Be a Bachelor degree holder.

  • Be fully enabled to teach with full state certification for teaching.

  • Should not have your certification or licensure requirements waived based on an emergency or for a temporary or provisional basis.

Additional requirements for teachers

If you are a new faculty in the teaching community then you may have some additional requirements to fulfill to be eligible for this program.

Elementary school teachers - Must be able to prove subject knowledge and skills in teaching, reading, writing, math and other areas of basic elementary educational needs by passing a state test.

Middle of secondary school teachers 

  • Must be able to prove a higher level of knowledge base and competency in each of the subjects you teach through the following -

  • By passing a state academic subject test which you wish to teach or having an academic major, grad degree or advanced certification or credentials in each of the academic subjects that you are interested in teaching.

  • Although if you aren't new to teaching, then you would be required to prove your knowledge in the subjects you are interested in teaching through a state standard of evaluation and match the requirements placed upon those who are new to teaching as mentioned above.


How do I apply?

To apply for the teacher loan forgiveness through the federal government, your first priority must be to complete the 5 consecutive years of teaching and then fill out the application for the program and then submit it to your loan servicer who will further deal with the matter.

If receiving student loan forgiveness wasn't enough you, you are able to receive not just the teacher's loan forgiveness program but also the public service loan forgiveness also. But the catch is that the period of teaching cannot be the same for both the programs.

It means that you would need to provide two different periods of teaching for the two programs which did not count on the other. Essentially 10 years of teaching for the PSLF and 5 more for the teachers loan forgiveness program.

Teacher Loan Forgiveness by State

Many of the states are offering specific student loan forgiveness for teachers specific to their states, especially for those teaching in schools with low income and in subject shortage areas. While there are also a few in some cities that offer a forgiveness program. Check in with your state's education agency to have a look at your options.


Other conditions regarding the Loan cancellation or discharge -

There is quite the number of conditions where your student loans can be canceled or discharged for 100 percent of the loan amount that is owed, including both the Direct loans and Perkin's Loans. Some of them are as follows -

  • School closed

  • False loan certification

  • Borrower’s total disability or death

  • Bankruptcy (in rare cases)

  • False certification through identity theft

  • The school does not make the required return of loan funds to the lender


Private Loans for Teachers

You always have the option to go with a private lender to fund your education whether it be your teaching degree or your certificate by taking out a private loan to pay for these. If you are interested in receiving a loan from a private lender such as a bank, school or a credit union, you should compare their options with federal loan options to see which ones suit your needs.

You should always make a note that the private lenders usually have a higher and more variable interest rate and this can cause you to be paying more through private loans than you would be through federal loans, whereas the federal loans usually have much lesser interest rates and also fixed rates.

Confirm that you have a solid credit history, as that might be essential in getting a private loan. You might also require a cosigner to get the loan.

The important thing to keep in mind is that unlike federal student loans or any of the direct loans that you could get, these private loans usually have very little loan forgiveness programs.


Teacher loan forgiveness program FAQs

1- 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.

2 - 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.

3- 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.

4 - 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.

5 - 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.

6 - 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.

7 - 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.

8 - 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.

9 - 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.

10 - 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.