Teachers aren’t in it for the money. In fact, most teachers you meet will tell you that they do at least something else to help make ends meet, whether it’s an extra duty or two within the school, an online business, or a part-time job. Most teachers do what they do because they love children, and they enjoy a rewarding career where they can really make a difference.
According to the American Community Survey (ACS) from the United States Census Bureau, education is one of the top 10 lowest paying college majors. Furthermore, regardless of major, the average amount of student loan debt is over $37,000. Add in the fact that most states require teachers to continue their education or risk losing their license, student loan debt is a major problem for teachers.
Many students are graduating with a bachelor’s or even a master’s degree while facing a mountain of debt that seems insurmountable when trying to make ends meet on a teacher’s salary.
If you’re a teacher reading this, none of this comes as a surprise. So what can you do about it? While there are some hoops to jump through and strict qualifications to meet, there are actually quite a few student loan forgiveness programs out there for teachers that are worth looking into.
There are three federal programs that offer varying degrees of teacher loan forgiveness: The Teacher Loan Forgiveness Program, The Public Service Loan Forgiveness Program, and The Perkins Loan Teacher Cancellation. Continue reading to learn more about each of these, as well as some other options if you don’t qualify for any of these federal programs.
Teacher Loan Forgiveness Program
The federal government offers a Teacher Loan Forgiveness Program for teachers who meet certain criteria. Candidates for loan forgiveness must meet all of the following requirements before they can apply:
- Have an outstanding balance on your Direct Subsidized Loan, Direct Unsubsidized Loan, Subsidized Federal Stafford Loan, or Unsubsidized Federal Stafford Loan
- Be or have been a full time, highly qualified teacher for five consecutive years (at least one of those years must be after 1998)
- Be or have been employed at a low income school or educational agency
- Have loans that were originated before the end of your five years of service
Am I a highly qualified teacher?
Most likely, if you went to college to be a teacher, you are a highly qualified teacher. Highly qualified teachers have met the following requirements:
- Have earned a bachelor’s degree
- Are fully certified in their state
- Are not operating under an emergency, provisional, or temporary certificate
Is my school low income?
If you’re not sure if your school qualifies, check out the Teacher Cancellation Low Income (TCLI) Directory. Your school only needs to be listed in the directory for one of your five consecutive years of service.
More about the Teacher Loan Forgiveness Program
The maximum amount of forgiveness you can receive is either $17,500 or $5,000, depending on your teaching field and experience. Special education teachers, math teachers, and science teachers may be eligible for the $17,500. All other teachers may be eligible for the $5,000. (Numbers last verified on January 19th, 2022)
In order to qualify for the Teacher Loan Forgiveness Program, you also have to be in good standing with your loans. You can’t be in default, unless you have made satisfactory arrangements to repay your loan, as defined by the Department of Education.
How to apply
Once you are sure you have met all of the requirements, you can apply for the Teacher Loan Forgiveness Program. Note that you must have the chief administrative officer of the qualifying school or institution where you work(ed) complete part of your application. You may need to submit more than one application if you are applying for forgiveness from more than one loan servicer.
Public Service Loan Forgiveness Program
Depending on your teaching experience, you may actually qualify for the Public Service Loan Forgiveness Program as well as the Teacher Loan Forgiveness Program. Your years of service for this program must be completely separate from your years of service for the teacher loan forgiveness program, however.
This loan forgiveness program isn’t just for teachers, but as a teacher, you may qualify if you:
- Have made 120 qualifying monthly payments
- Are working full time
- Have direct loans (or have consolidated all of your loans into a direct loan)
- Use an income driven repayment plan
This option is great because it is available to a larger number of teachers; you do not need to teach at a low income school. It also offers complete forgiveness, unlike the Teacher Loan Forgiveness Program, which puts a cap on the amount that can be forgiven. The unfortunate part about this option is that you have to make 120 qualifying payments, which amounts to 10 years before you are eligible for forgiveness.
How to Apply
Before you can apply, you will need to fill out the employment certification form. You should revisit this form annually, as well as any time you switch employers.
The Department of Education has a really useful Public Service Loan Forgiveness (PSLF) Help Tool to help you determine your eligibility and next steps to applying for loan forgiveness under this program.
Perkins Loan Teacher Cancellation
If you have a Federal Perkins Loan and also meet certain requirements, you might qualify to get that loan completely canceled. You must meet one of the following requirements:
- Teach in a school that serves low income families
- Be a special education teacher
- Teach math, science, foreign language, bilingual education, or any field that has a shortage of teachers (determined by your state education agency)
- Teach at a private 501(c)(3) non-profit school
This program is unique in that you do not have to be teaching for a certain number of years before you can take advantage of this loan forgiveness. You can have a portion of your loan canceled for each academic year you are employed. The cancelation schedule is as follows:
- Year 1 and 2: 15% per year
- Year 3 and 4: 20% per year
- Year 5: 30%
How to Apply
This one is a bit trickier to apply to, as there is not one set place to apply. In order to apply for the Perkins Loan Cancellation Program, you must contact the school that made the loan or the loan servicer.
Additional Loan Forgiveness Programs
Many states have additional loan forgiveness programs, and some of these programs are specifically for teachers. You also might be able to take advantage of loan forgiveness from an income based repayment plan.
Regardless of your occupation, many loan providers offer complete loan forgiveness after either 20 or 25 years of following an income based repayment plan. Check with your loan provider for the information on your specific plan.
Which Loan Forgiveness Program Should I Pursue?
When trying to decide which loan forgiveness program(s) to pursue, first take a look at all the requirements of each. You may be able to eliminate some programs simply because you don’t meet the requirements. Once you have a list of which programs you are eligible for, do the math on which program(s) will be most beneficial for you.
For example, if you qualify for both Public Service and Teacher Loan Forgiveness, take a look at how much you will owe after both five and ten years. This can help you figure out which plan would save you the most money.
Example: You currently owe $50,000 and are eligible for both the Public Service and Teacher Forgiveness Programs. Say after 10 years, you’ll still owe $40,000. In this case, you would want to opt for the Public Service Program because you will get that complete $40,000 forgiven after ten years. If you did the Teacher Program first, you would only have $5,000 or $17,500 forgiven after five years (depending on your eligibility), and then you would have to wait ten more years and continue making payments for the rest to be forgiven.
Another Example: You currently owe $15,000. Say after five years you’ll still owe $10,000. If you are eligible for the full $17,500 in the Teacher Loan Forgiveness Program, you are better off pursuing that program. You will get your full amount forgiven in only five years instead of ten.
What About Taxes?
Before you proceed with getting your loans forgiven, don’t forget to think about how your loan forgiveness will affect your taxes. Thankfully, the federal Teacher Loan Forgiveness and Public Service Loan Forgiveness programs are exempt from taxes. That means if you are granted forgiveness from one of these programs, your loans are forgiven—period.
However, if you use any of the other methods to obtain loan forgiveness, the amount of loans that you have forgiven will be considered income when it comes time to file your income taxes. This could leave you owing a large amount of money in taxes. For example, if your yearly income is $60,000 and you had $30,000 in student loans forgiven, that means your taxable income for that year will be $90,000.
You’ll still end up paying less over time than you would have if you continued to pay your loan, but you should be aware of this so it doesn’t come as a surprise. Depending on how much you have forgiven, this could mean you will owe thousands of dollars in taxes. This can be a huge hit, especially if you were counting on a tax refund. The IRS does offer payment plans, although you will be charged a small fee if you opt to use a payment plan.
A Word of Caution
There have been many cases of applications for loan forgiveness, especially the public service loan forgiveness getting denied for a wide variety of often vague reasons. When pursuing loan forgiveness, you need to do your research and continually be in contact with the Department of Education to ensure you are still on track to meet eligibility requirements.
Try to make most of your contact through email if possible so you can have everything in writing, and if you need to contact in person or on the phone, make sure you keep solid records of what you were told.
If you just assume that you can apply for forgiveness after 5 or 10 years and your loans will easily be forgiven, unfortunately, that probably won’t be the case. Take the time to make sure you are doing everything correctly to give yourself the best chance of loan forgiveness success. Until that balance is at zero, there is no guarantee your loans will actually be forgiven. Don’t plan your finances around the forgiveness of your loans.
While loan forgiveness can be tricky to navigate, there are quite a few options to explore. Take the time to determine which options you are eligible for, and which options will be most beneficial for you to make the most of these programs. Having your student loans forgiven can be one major stressor off your back as a teacher.