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Far too many educators start out with heavy student loan debt. Unlike some other professions, our income usually doesn’t justify borrowing for college costs. Six figures of debt is hard to swallow when you’ll be lucky to reach a six figure income – even if you work hard to grow your income. Fortunately, one real advantage for educators is the number of teacher loan forgiveness options out there.
In this post, we’ll review four options to deal with student loans. The good news is that virtually all public educators will qualify for at least one of these options. The even better news is some educators are likely to have 100% of their loans forgiven!
Any forgiveness is essentially bonus money on top of your income. Don’t let thousands of dollars get away.
That’s worth a quick read, right?
Four Teacher Loan Forgiveness Options
1. Teacher Loan Forgiveness
|What The Program Forgives:||Direct or FFEL Loans|
|Amount Forgiven:||Up to $17,5000|
Let’s start with the option specifically designed for teachers. If you work in an eligible low income school or education service agency (ESA) you are eligible for this program. You can look for your employer in the Teacher Cancellation Low Income Directory.
After you work at an eligible school for five consecutive academic years you qualify for up to $5,000 dollars in forgiveness. If you are a special education teacher, or secondary science or math teacher you are eligible for up to $17,500 in forgiveness!
If you are interested in this program, make sure you confirm you are working at an eligible institution listing in the TCLI Directory. Be aware that PLUS loans and Perkins are not eligible for forgiveness under this program.
You can find full details on the Federal Student Aid website.
Even though this program is specifically designed for teachers, be aware it may not be the best option for you. Choosing this option may impact your ability or timelines for other options. Keep reading!
2. Perkins Loan Cancellation for Teachers
|What The Program Forgives:||Federal Perkins Loans|
|Amount Forgiven:||Up to 100% (Over 5 years)|
This program applies only to Perkins Loans. (Remember, those were excluded from option 1.) Teachers are eligible for forgiveness if they work full-time in a public or non-profit school system that serves students from low-income families OR if they teach in the following fields:
- Special education
- Foreign language
- Bilingual education
- A teacher of a shortage area as determined by the state education agency
Even better, the definition of “teacher” is most flexible in this program. You must provide students with direct services directly related to classroom instruction but are not required to be certified or licensed in order to receive this benefit. Private school teachers can be eligible.
Once again, make sure you check the Teacher Cancellation Low Income Directory to determine if you are working in an eligible location.
If you are, and work full time, a percentage of your loan will be forgiven for each year. You can receive up to 100% forgiveness for teaching five years. Forgiveness is granted in the following increments:
|Perkins Loan Cancellation|
|TOTAL AFTER 5 YEAR||100%|
If you have Perkins loans this is definitely an option worth exploring. You can find more detail on Perkins cancellation here.
3. State Sponsored Programs
|What the Program Forgives:||Varies by State|
|Amount Forgiven:||Varies by State|
Many states offer programs for teachers. It’s difficult to provide much in the way of details on this option because they depend entirely on your position and the state in which you work.
Search for options in your state in the AFT database.
It’s worth a moment to look. Your state may give you more options to consider.
4. Public Service Loan Forgiveness
|What the Program Forgives:||Federal Direct Loans|
|Amount Forgiven:||Up to 100% (After 10 years)|
I saved potentially the best program for last. The PSLF program has the widest eligibility (the vast majority of educators will qualify) and the highest potential payoff with 100% of your loans forgiven.
Unfortunately, there has been a lot of confusion and negative press about the PSLF. This has frightened some people away from even considering this option.
As long as your loans are Federal Direct Loans (or you can reconsolidate them into federal direct) and you are willing to teach for at least 10 years, this option provides the largest benefit.
If you, like too many educators, have six figures of student debt, this is the only program that could potentially forgive all of your student loan debt.
This program also does not require you to be a teacher, opening up options to most educators in non-teaching positions. The income-based repayment option makes it even more attractive to low-earners.
In short, you owe it to yourself to at least consider the PSLF option.
To qualify you must work in a government organization or a qualifying non-profit. You must make qualifying monthly payments for 120 months (10 years) under a qualifying repayment plan. These payments do not need to be consecutive. This is one rumor or piece of misinformation out there that keeps people from considering the PSLF option.
Notice how many times I used some form of the word “qualifying” in the previous paragraph? It’s important to make sure you understand and confirm qualifications so you don’t waste years making payments that don’t count.
You can check throughout the process to see how many qualifying payments you have made. It is important to do this to ensure that your payments are being correctly counted.
After 120 qualifying payments you can apply to have 100% of your federal direct loans forgiven. Yes, 100%.
There are a number of problems plaguing the PSLF program that are scaring potential beneficiaries away. These include poor information transmission between providers, incorrect advice given at the beginning of the program, and an initial high rejection rate. Hopefully, this improves so more educators can / will take advantage of what can be a massive benefit.
In the meantime, it is critical that you understand the requirements and follow the program requirements. The Student Loan Planner is a great resource on the subject. I recommend starting with the Top 40 Tips to Save Thousands.
You should also read the Federal Student Aid PSLF information.
One note – be aware that the Teacher Loan Forgiveness program (#1) and the PSLF option (#4) cannot be applied simultaneously. If you were to use both, you would end up taking a total of 15 years – 5 for teacher loan forgiveness and 10 for PSLF.
Which Option Should I Choose?
Unfortunately, this is not an easy question to answer because it will depend on your loan types, amounts, position, and career plans. I can provide some quick thoughts and then will leave you with links to a comprehensive resource.
- If all of your debt is in Perkins loans and you work at an eligible institution, that is almost certainly your best option.
- If you have less than the forgivable amount ($5000 or $17,500 depending on position) and work in a qualifying agency, then Teacher Loan Forgiveness is likely the best route.
- If you have a great deal of federal direct student debt, then PSLF is almost certainly the best choice.
- If you hate holding debt, plan to work in education less than 10 years, or only hold private loans, then PSLF is likely not a good option for you.
My wife and I disposed of our student loan debt years ago through a variety of forgiveness programs (we both worked in Title 1 schools) and paydown strategies. It was before PSLF, so I don’t consider myself an expert on the subject. I needed to provide you with an overview, and (as always) want you to have access to resources for going deeper.
I find Student Loan Planner to be an incredible resource for educators with student loans. They have tons of free content if you want to do it yourself. If this seems overwhelming and you’d appreciate guidance, they also offer a reasonably priced paid service.
Start by checking out How to Know if Teacher Loan Forgiveness is Worth It and you can read all their teacher specific student loan content.