Situation Analysis

Situation Analysis

Student Loan Forgiveness for Teachers

Student Loan Forgiveness for Teachers

For most teachers, the teaching profession is rewarding for reasons other than the money they can earn. However, getting a teaching degree often entails taking out student loans, which, on a new teacher’s salary can be a significant financial burden. Fortunately, there are several student loan forgiveness programs available for teachers to reduce or even eliminate their debt if certain requirements are met.

Teacher Loan Forgiveness

For teachers with a small amount of debt from federal direct or Stafford loans, the Teacher Loan Forgiveness program is the quickest way to obtain loan forgiveness. To qualify, a teacher must teach full-time for five consecutive years at a qualifying low-income school. The U.S. Department of Education publishes a list of qualifying schools that can be accessed on its website.  With the objective of drawing in more secondary math, science and special education educators, the program forgives up to $17,500 of debt for teachers in those specialties. Teachers of other subjects in both elementary and secondary schools can have up to $5,000 forgiven. At the end of the fifth consecutive teaching year, a Teacher Loan Forgiveness Application can be submitted to the loan servicer.

Public Service Loan Forgiveness

For teachers who graduated larger [federal direct loans], the Public Service Loan Forgiveness (PSLF) program may be a better option. The program requires teachers to work at a qualifying public or private school for a minimum of 10 years, after which it may forgive up to 100% of remaining federal student debt.  To be eligible, teachers must have made 120 on-time payments on the loans. If a teacher takes a different job within the educational system, such as an administrator, the program will still forgive the debt. Because the program started in 2007, applications for PSLF forgiveness cannot be submitted until October 2017, which is the first month when 10 years of teaching service can be completed.

Nerd Tip

Perkins Loan Cancellation

For teachers with federal Perkins loans, the Perkins loan cancellation program could eliminate up to 100% of their debt. The program specifically targets teachers who work full-time at an eligible school, or who specialize in math, science, special education a foreign language or bilingual education. Eligible teachers can apply after their first and second years in a qualifying teaching position and receive 15% reduction in their loan balance each year. After their third and fourth years, another 20% is forgiven. The remaining 30% is forgiven after the fifth year. The program is coming to a close because Perkins loans will not be available after 2017. Borrowers have until Sept. 30, 2016 to apply for the program.

Specialized Programs

Teachers who take a position at an accredited health professions college may be eligible to receive up to $40,000 in student loan reimbursements. With some colleges, the reimbursement payments are matched by the college. The program, which is sponsored by the U.S. Health and Human Services Department, only requires a two-year commitment.

State Programs

Some states provide supplemental assistance for loan repayment or forgiveness. Teachers who have lived in New Mexico for at least a year and commit to a two-year job at a low-performing school could have most of their federal loans forgiven. In Illinois, teachers can receive a matching $5,000 for loan forgiveness. North Dakota pays eligible teachers $1,000 per year for up to three years towards their federal loans. Arkansas pays up to $4,000 a year for up to three years towards loan forgiveness. Montana, Mississippi, and Texas have similar programs.

Unfortunately, none of these programs apply to private student loans. For students entering college seeking a teacher’s credential, only a federal direct or Stafford loan offers the opportunity for loan forgiveness.