Is Teacher Loan Forgiveness worth it?

Is Teacher Loan Forgiveness the way to go when it comes to handling your student loan debts? Read on to learn about the available student loan forgiveness for teachers, what they could mean for you, as well as other options to pay off your student loans.

Updated by Vidish S on 22nd July 2020

If you are a teacher who has taken loans to complete your courses and are now looking for loan forgiveness programs, then you have a few options. But, only one of them has a name that specifically refers to teachers. If you are employed by a U.S. federal, state, local, or tribal government or not-for-profit organization, you might be eligible for the Public Service Loan Forgiveness Programs as well. It should be noted that are a number of jobs available to help get your loans forgiven. Having an in-depth understanding of the various student loan forgiveness jobs out there is crucial to see if your job can get your loans forgiven.

Each forgiveness program has differing guidelines and qualifications, and the right program for you depends in large part on your total debt, current and future employment, and your life goals. Certain tax implications can also affect your decision of choosing a forgiveness plan.

Is teacher loan forgiveness the way to go when it comes to handling your student loan debts? Read on to learn about the available student loan forgiveness for teachers, what they could mean for you, as well as other options to pay off your student loans.

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Teacher Loan Forgiveness has closed benefits

Even though the Federal Teacher Loan Forgiveness Program is popular among the teachers looking to end their student loan debt, there are very specific requirements associated with it.

If you have worked as a full-time teacher in a low-income school or educational service agency for at least five consecutive years, then you may be eligible for loan forgiveness up to the amount of $17,500 as long as you meet some additional requirements. For teachers outside this eligibility domain, the maximum amount that you can get forgiven on your loans is capped at $5,000.

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Eligibility for Teacher Loan Forgiveness

These are the main requirements for Teacher Loan Forgiveness, according to Student Federal Aid, an Office of the US Department of Education:

  • Full-time teaching for five consecutive and full years with one of those years being after 1997–98.

  • A highly qualified teacher employed at a qualifying school.

  • The loans must have been made before the end of your five academic years of qualifying teaching service.

PSLF for Teachers

PSLF is a federal student loan forgiveness programs that can be availed by anyone having a qualifying Federal Direct Loans and who meets all the program requirements. 

Those requirements are:

  • Student Loans must be from a federal income-driven repayments plan

  • Make 120 full payments on time. May not be consecutive

  • Work for a government or qualifying non-profit organization the entire time

    you are making qualifying payments, as well as during the application process.

Why PSLF is better than Teacher Loan Forgiveness

Assume that you are a teacher with $50,000 in student debt. You’re a highly qualified physics teacher at the high school level. You could get $17,500 in total forgiveness.

You are earning about $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 to the Teacher Loan Forgiveness program. You would get $17,500 forgiven in the first five years. Of course, you would still have a leftover balance. Then you would have to wait around for an additional 10 years to get your loans forgiven since you cannot double count service for both programs.

Instead of doing that, you could waive Teacher Loan Forgiveness and just utilize PSLF from the start.

If you filed married filing separately for taxes and had inflation level raises on your $40,000 salary, your first PAYE payment as a teacher would be $74 a month.

Over 10 years, you would have to pay a total of $10,123 under PSLF as a teacher.

However, if you did Teacher Loan Forgiveness, you would have $17,500 wiped away, but you would still owe $50,000 plus whatever interest had accrued minus that forgiveness payment.

It’s obvious that anyone would rather pay $10,000 over 10 years instead of $30,000 to $40,000 balance that is left after Teacher Loan Forgiveness.

Hence, Teacher Loan Forgiveness is not worth it if:

  • You want to have a career in teaching

  • You have a debt of more than $30,000

  • The debt you have comprises mostly of federal student loans

Final Thoughts

It might not always be clear as to which program best suits your needs but we hope this article has given you some clarity regarding the same.

If Forgiveness does not work in your favor then give refinancing a thought to ease your debt-related tensions.

Interested in Refinancing and want to learn more? Check out the Best Companies to Refinance Your Student Loans to find the right fit for your needs.