Student loans can be daunting for anybody, but especially for new teachers. With an average starting salary of $38,617 nationwide and the average student debt being nearly the entirety of that ($32,731), it can be difficult to pay back your student loans. This lower than average starting salary leaves room for interest to compound, extending the overall time you'll be stuck with your debt burden. Not only that, but any inability to pay due to unexpected financial hardship may leave you at risk. You could be at risk of huge interest hikes, negative impacts on your credit, and possibly default. However, teacher student loan forgiveness programs can help.
Luckily, these programs are designed to help teachers make their payments. From simple budgeting aid, to outright forgiveness of student loan debt, help should be sought out sooner rather than later.
Teacher Loan Forgiveness Program
With the Teacher Loan Forgiveness Program, teachers may be eligible for up to $17,500 in forgiveness for certain federal loans. However, there are certain requirements that you should be aware of before applying. According to StudentAid.gov, the requirements include:
- You must have obtained your Direct or FFEL loans before October 1, 1998.
- You must have been employed as a full-time "highly qualified teacher" for five consecutive years with at least one of those years being after the 1997-1998 academic year.
- You must have taught in a "low income" elementary school, secondary school, or educational service agency.
- The loans that you are seeking forgiveness for must have been taken out before the previously mentioned five consecutive years of full-time service.
While these requirements are fairly rigid, there are certain exceptions to these rules, so it would be advisable to research them at StudentAid.gov.
Public Service Loan Forgiveness
The Public Service Loan Forgiveness (PSLF) program completely eliminates the entirety of your Direct student debt. With this being such a good deal, there's a catch. The requirements are fairly stringent, so look them over thoroughly before you decide that PSLF is right for you. These requirements include:
- You must make 120 "qualifying" monthly payments under a "qualifying" payment plan.
- You must be employed full-time by US federal, state, local, tribal, or not-for profit organization.
- You must have Direct loans or consolidate your loans into direct loans.
- You must pay your loans under an income driven repayment (IDR) plan.
A qualifying payment is any payment made on your direct loans after October 1, 2007. The payment must be for the full amount shown for whichever income driven repayment plan you are on. You must also be be employed full-time under a qualifying employer, such as those listed above. Your payments must have also been made no later than 15 days past their due date. Furthermore, no payments will count if you have an "in-school" status, or are in the grace period, deferment, or forbearance.
If you feel that the PSLF program is right for you, check out the StudentAid.gov for more details.
Federal Teacher Cancellation for Perkins Loans
Federal Teacher Cancellation for Perkins Loans is a program which can allow up to 100% in student debt cancellation of a Perkins loan. This program covers Perkins loans, which expired in September of 2017. This program applies only to individuals who have worked full time in a public or nonprofit elementary or secondary school. Teachers in these schools must have served low-income families, been a special education teacher, or a teacher in a field where the state faces a shortage of qualified teachers.
For more specific information about the Federal Teacher Cancellation for Perkins Loans program, please visit StudentAid.gov.
State by State Teacher Student Loan Forgiveness
Many states offer programs in which teachers can have their student debt partially forgiven or outright cancelled, including New York, Illinois, and Texas. Student Loan Hero has a great article linking different opportunities within the state here. If your state does not appear on this list, it would still be a good idea to research student loan forgiveness programs for your state thoroughly.
Be Careful
Be mindful of your expectations with student debt cancellation, as many cancellation programs require you to pay income tax on the amount of loans forgiven. According to StudentLoanPlanner.com, this can be as much as 10-37% of the amount forgiven. Luckily, they go on to say in the same article that "Borrowers are not required to pay income tax on loan amounts that are canceled or forgiven based on qualifying employment". This refers to the Teacher Loan Forgiveness Program and the PSLF Program mentioned above.
While this information can get you working on effective ways to recover from student debt, you should always do your own research and speak to qualified tax and student loan advisors. This blog is simply meant to relay information and should not be construed as legal or financial advice.
If these teacher student loan forgiveness programs do not seem right for you, you can always revisit them at another time. Or you can look into a variety of refinancing options that can help you get out of debt faster. Wouldn't you know it, you're on one of their websites right this very second. Crazy, right? Defynance is a student loan refinancing company focusing on freeing people from student debt using smart Income Share Agreements. Not only that, but we offer our free ROEP ecosystem full of resources for you to improve various aspects of your life. Worth a second look, huh?
