Imagine your student debt disappearing simply because you chose one of the most important professions in the world: teaching. Sound impossible? But it’s possible for many educators, thanks to student loan forgiveness programs. After all, more than 60 percent of public school teachers took out loans to pay for their education, according to the Learning Policy Institute. So, if you have federal student loans, you can choose from four forgiveness options: Public Service Loan Forgiveness, Teacher Loan Forgiveness, Perkins Loan Cancellation for Teachers, and state-sponsored student loan forgiveness programs.
Public Service Loan Forgiveness
The Public Service Loan Forgiveness (PSLF) program helps eliminate student debt if you work in the public sector. According to the U.S. Department of Education, more than 40 million Americans have student loans. PSLF is a real opportunity for those committed to public service to get rid of their debt after 120 qualified payments (about 10 years).
The main advantage of PSLF is that it is not limited to teachers in low-income schools. To qualify, you must work for a qualifying organization. This can be any government entity — federal, local, or tribal — or a nonprofit that provides important public services. This makes the program available to a wide range of people, including employees of government agencies, charities, and health care providers.
To take advantage of PSLF, your loans must be Direct Federal Loans. If you have other types, such as Perkins or FFEL loans, they must be consolidated first. You can check what loans you have at StudentAid.gov.
To ensure your payments count, you need to work for an eligible employer and repay your loans through an income-driven plan. This will help you make your payments more affordable and help you reach forgiveness faster. And the amounts forgiven through the program are tax-free, meaning you won’t get a nasty tax bill after your debts are forgiven.
An example of the PSLF program in action:
Imagine you’re a public school teacher with $50,000 in student loan debt. You pay $300 a month on an income-driven repayment plan. You have worked at the school for 10 years, making 120 payments. After that, you’re left with about $14,000 in debt. PSLF will forgive that remaining amount, so you don’t have to pay any more. And you won’t have to pay taxes on the amount forgiven.
Teacher Loan Forgiveness (TLF)
The Teacher Loan Forgiveness (TLF) program allows teachers to eliminate some of their student debt. Under the program, you can have up to $17,500 in direct or subsidized and unsubsidized FFEL loans forgiven after five full and consecutive years of teaching at an eligible school. However, there are a few important requirements to qualify for this assistance.
First, you need to have been a full-time teacher at an eligible school for five school years. At least one of those years must have occurred after the 1997-98 school year. Teachers who major in special education or teach middle school math and science can have up to $17,500 forgiven. Other eligible teachers can have up to $5,000 forgiven.
It is important to note that PLUS and Perkins Loans do not qualify for this program. Also, time spent teaching to receive benefits through AmeriCorps does not count toward the five-year requirement.
To maximize your forgiveness amount, you can apply for TLF, which will allow you to avoid making monthly loan payments. However, interest will continue to accrue. If your loan balance exceeds the forgiveness amount you are applying for, you will not be eligible for this option.
Example of the TLF program in operation:
Imagine you are a teacher at a TLF-eligible school and have worked there for five full years. You owe $30,000 in student loan debt.
- Your payments: You make regular payments on your loans for five years.
- Forgiveness: After that, you apply for loan forgiveness. Because you are a math or science teacher, you are eligible for forgiveness of up to $17,500.
- Result: Your remaining debt after forgiveness is $12,500, which is now forgiven.
Perkins Loan Cancellation for Teachers
The Perkins Teacher Loan Forgiveness Program provides an opportunity to relieve yourself of some of your federal Perkins loan debt. If you qualify, up to 100% of your loan can be forgiven if you work as a teacher for a certain amount of time. The forgiveness process occurs in stages: 15% of the loan is forgiven in the first two years, 20% in years three and four, and 30% in year five. It’s important to note that each amount forgiven includes the interest accrued for that year.
You can check your dashboard to see if you have Perkins loans. You can also use an online database of eligible schools to determine if your school is classified as a low-income institution.
Suppose you don’t work at a low-income school. In that case, you may still qualify for a waiver if you teach in areas with a shortage of qualified professionals, such as math, science, foreign language, bilingual education, or special education.
According to the Internal Revenue Service, private school teachers may also qualify if their institution is a nonprofit organization and provides elementary or secondary education under state law.
Example of how the Perkins Teacher Loan Forgiveness program works:
Imagine you are a math teacher at a low-income school and have a Perkins loan of $20,000.
- Year 1: After your first year of teaching, 15% of your loan is forgiven, which is $3,000. That leaves you with $17,000.
- Year 2: After the second year, another 15% is forgiven, adding another $3,000 to the amount forgiven. That leaves you with $14,000.
- Year 3: In the third year, 20% is forgiven, which is $2,800. That leaves you with $11,200.
- Year 4: After the fourth year, you get another 20% forgiven, $2,240. That leaves you with $8,960.
- Year 5: In the fifth year, 30% is forgiven, which is $2,688. Your debt is completely forgiven, leaving you with a balance of $6,272.
So, after five years of teaching, you could cancel $20,000 of your Perkins loan debt and are no longer obligated to pay it back.
State-Run Loan Forgiveness Programs for Teachers
Many states offer loan forgiveness programs. These can help with not only federal loans but also private loans. Here are a few examples:
- Illinois: Teachers working in low-income schools can receive up to $5,000 to pay off their student loans.
- Texas: This state has a Math and Science Teacher Loan Repayment Program. It offers up to $10,000 to educators working in public schools.
- South Carolina: There are several programs available. The South Carolina Teaching Fellowship provides aspiring teachers up to $24,000 in forgivable student loans if they agree to teach in public schools for a certain period. They must work for one year for each year they receive the fellowship. Additionally, teachers working in shortage or high-need areas can receive up to $5,000 for each year they work.
Teachers should contact their state education department to learn about available loan forgiveness programs. You can learn about the specific requirements and conditions for participating in various programs there. These programs help with debt repayment and encourage teachers to work in needy areas, improving these communities’ education quality.
Can Private Student Loans Be Forgiven?
When it comes to private student loan forgiveness, it’s important to understand that it depends on the rules set by your lender. Unlike federal programs, private lenders are not obligated to forgive debt. Forgiveness may only occur in rare cases, such as your disability or death; even in these situations, it’s not guaranteed.
If you’re having trouble paying off your private loans, don’t despair — a few options can help. One of them is refinancing. This process can result in a lower interest rate and monthly payments, ultimately saving you money.
It’s also worth contacting your lender to see if assistance programs or temporary payment reductions are available. Some lenders may offer support if you’re experiencing temporary financial hardship, but these offers depend on the lender’s terms and conditions and your situation.