Just for Teachers: A Student Loan Forgiveness Program of your Own

Teachers, you are appreciated! Student loan forgiveness has been given much attention over the last few years, particularly Public Service Loan Forgiveness (PSLF). However, there are other loan forgiveness opportunities. One such program is Teacher Loan Forgiveness, which provides a path to either $5,000 or $17,000 of loan forgiveness for elementary, middle, and high school teachers. Like any other loan forgiveness program, there are several notable eligibility requirements.  

Time. To be eligible for Teacher Loan Forgiveness (TLF), you must complete five, consecutive and complete academic years of employment in a position considered to be full-time. Absences under military orders, the Family and Medical Leave Act and for certain post-secondary education create exceptions to this policy.

School. Loan forgiveness is for K12 teachers who work at a school or educational service agency designated as serving low income individuals. The Department of Education publishes a list of schools and agencies that meet this criteria. Removal of a school from this list does not disqualify the teacher from loan forgiveness, as long as one full year meets this eligibility criteria. 

Credentialing. To qualify for loan forgiveness, teachers must be considered highly qualified for the duration of their five qualifying years. This means they have at least a bachelor’s degree and have met their state’s certification requirements. 

Loan.  Loans must be Direct or FFEL Program loans made after October 1, 1998, and must have been made before the end of the five qualifying years discussed under the time requirement above. This means that new student loans obtained during these five years are eligible for forgiveness. 

Who gets the $17,000?  For teachers who meet the above criteria, there are two career paths to this higher benefit. One is teaching math or science at the secondary school level. The other is as a special education teacher at any level, elementary through high school.  All other teachers remain eligible for $5,000 in student loan forgiveness.  

What about TEACH grants?  The federal Teacher Education Assistance for College and Higher Education (TEACH) program is a separate program from TLF and teachers can benefit from both.  TEACH offers grants up to $4,000 in annual financial aid to full-time undergraduate and graduate students who are enrolled in a teaching degree program.  Grant requirements include four years of service. TEACH and TLF service periods can run simultaneously. More information is available on the government student loan website. Here you can find additional details, application information, and links to the FAFSA. 

Take Action! Don’t Lose Qualification for Student Loan Forgiveness

College affordability and student loan forgiveness are frequent topics of public concern.  Two weeks ago, I discussed Public Service Loan Forgiveness (PSLF) qualification standards. There are very specific guidelines that must be followed in order to qualify for this program. However, it is not enough to just qualify — specific action steps need to be followed in order to benefit from PSLF. Borrowers who wish to pursue Public Service Loan Forgiveness need to carefully manage both their loan repayment terms and their loan documentation.

Friends People Group Teamwork DiversityLet’s discuss the key actions for both.

Choose the right repayment plan. When borrowers graduate, they are given many choices for loan repayment plans. The default option is the standard repayment plan. Under this plan, loan payments are calculated for a 10-year, or 120-month, fixed payment. You must make 120 qualified payments toward your loans before qualifying for PSLF, so there is no benefit to this repayment plan.  

A borrower who wishes to qualify for PSLF should select an income-driven repayment plan, or IDR.  Income based payment plans were introduced to ease the burden of loan repayment, especially during the early earning years. Under these terms, your payment is calculated using a formula that is based on a percentage of your income, with payments stretched over 20-25 years. 

Caution! Beware of loan consolidation! It is not unusual to leave school with multiple loans, with different servicers and different due dates. Tracking payments can be challenging. A federal consolidation loan with a single payment can be a good option, however, this will affect progress toward Public Service Loan Forgiveness. A consolidation loan is considered a new loan, and re-starts the counter toward the required 120 payments needed for loan forgiveness. If you’ve already been making progress toward PSLF, those payments will no longer count toward the 120 under consolidation.  

Loan Forgiveness Debt Filling Application Concept

Document carefully and frequently. Qualifying for PSLF requires that your employment is with a qualified employer. The federal government provides a form to document your employment. It must be signed by you AND your employer and filed with the Department of Education. Directions are on the form.  It can be mailed, faxed, or uploaded depending on your loan servicer, but it cannot be completed online. It is recommended that you file the form annually, or at a minimum, whenever you change employers. Otherwise, it becomes more difficult to verify qualifying employment.  

Be mindful of on-time payments. There are other important actions for maintaining PLSF qualification.  You must make payments every month, on time. You can’t double-up or skip months. You do not lose the benefit of payments made during qualified employment if you leave that job for non-qualified work. The counter resumes if you once again work for a qualified employer.  

Public Service Loan Forgiveness: Who is it for?

image-from-rawpixel-id-1247-jpeg.jpgEarning a college, graduate, or professional degree is an accomplishment to celebrate, but once school ends, the reality of paying back student loans begins. Most direct student loans offer a six month grace period, with interest subsidized by the federal government, intended to provide the borrower with sufficient time to find employment. But for the millions of students who graduated in the spring of 2019, that grace period is ending. Fortunately, the federal government has many options to ease the burden of student loan payments.  

If you work for the government or a nonprofit organization, you might be eligible for Public Service Loan Forgiveness (PSLF). This is a federal program designed to provide an incentive to attract job seekers to employment in much needed, but often lower paying, service work. Those who qualify for PSLF can have their student debt balance paid in full by the federal government, however, there are many rules to follow.   

Qualify!

Loan Forgiveness Debt Filling Application ConceptIf you want to be eligible for PSLF, keep in mind that you must do qualifying work, for a qualified employer, make qualified payments, for a qualified amount of time, under a qualified plan.  

The key word is qualified.  

  • Qualifying work –  Full-time employment, defined as 30 hours or more per week, or work that your employer considers full time. Part time hours at different qualified employers (see below) can be combined to reach the 30 hour minimum. There is a notable exception for religious work. Time spent on religious teaching, worship, or proselytizing does not apply toward the 30 hours.   
  • Qualified employer – Any government organization or a nonprofit organization recognized under section 501(c)3 of the Internal Revenue Code, or federal tax code.  Any level of government is acceptable. It could be a local, state, federal or tribal agency. However, if you work for a for-profit government contractor, a labor union, or a partisan political organization, your loan payments will not count toward PSLF.  
  • Qualified payments – A minimum of 120 payments are required before your debt can be considered for PSLF, and are only counted if they are on time (no more than 15 days after the due date), and paid in full. Payments are only considered qualified if they are made while you are working for a qualified employer. 
  • Qualified repayment plans – Borrower payment plans include all income driven repayment plans. There are several income driven repayment plan choices that a borrower can select. As the name implies, these repayment plans are based on the borrower’s income, as well as on other considerations, such as family size. 

Where can I learn more?  

Is Public Service Loan Forgiveness a good option? The best source for more detailed information is the Federal Student Loan Website.  Many rules must be followed to qualify for PSLF and it is important to follow the rules carefully to reap the benefits of this program.