Teaching is a noble profession, but it isn’t normally considered the cushiest job out there. Still, it offers one perk many other careers don’t: student loan forgiveness.
If you’re a teacher, there are three programs — Teacher Loan Forgiveness, Public Service Loan Forgiveness and teacher cancellation for Perkins loans — that can forgive some or all of your federal student loans. These programs don’t apply to private loans; if you have private loans, ask your lender about flexible repayment options.
Here’s what you need to know about getting your federal student loans forgiven.
Teacher Loan Forgiveness
At a glance
- Teach full-time for five consecutive years at a qualifying low-income elementary or secondary school to be eligible.
- Borrowers with federal Direct and Stafford loans qualify.
- Up to $17,500 may be forgiven.
Best for: Qualifying teachers who don’t have a large amount of debt. The program is less generous than Public Service Loan Forgiveness — more on that below — but it offers forgiveness more quickly.
How to get it: Check the eligibility of the school where you teach at the Teacher Cancellation Low Income Directory. The exact amount you’ll be forgiven depends on the subjects and grade levels you teach. Secondary math, science and special education teachers can get up to $17,500 forgiven; elementary school teachers and secondary school teachers who teach other subjects can get up to $5,000 forgiven.
To apply, complete the Teacher Loan Forgiveness Application and submit it to your loan servicer at the end of your fifth consecutive teaching year. Your superintendent, human resources officer or principal will need to complete a section of the form. If you worked at multiple qualifying schools during the five-year period, you’ll need one person from each to fill out that section.
Public Service Loan Forgiveness
At a glance
- Work for the government or a nonprofit (including public schools and private nonprofit schools) for at least 10 years to be eligible.
- Borrowers with federal direct loans qualify. If you have other types of federal student loans, you can consolidate them to become eligible.
- Get 100% of your remaining federal student debt forgiven after you’ve made 120 on-time payments. They don’t have to be consecutive payments — you’re still eligible if you’ve had periods of deferment or forbearance, for example.
Best for: Teachers who have a lot of debt or want to take a different job without being disqualified from loan forgiveness. For example, a teacher could transition into an administrative role at his or her school or at another nonprofit and still qualify for Public Service Loan Forgiveness.
To save the most money through Public Service Loan Forgiveness, make your 120 payments on an income-driven repayment plan.
How to get it: Submit an employment certification form from each of the employers you’ve had while making your 120 payments to FedLoan Servicing, the company that oversees the PSLF program. It’s easiest to do this whenever you change jobs, but you can complete the forms retroactively, too. If FedLoan Servicing isn’t already your servicer, the Department of Education will transfer your loans to it.
After you’ve made 120 qualifying payments, you’ll submit an application for Public Service Loan Forgiveness. The application isn’t available yet because the PSLF program started in 2007, which means that no borrowers qualify for forgiveness through it until at least October 2017.
Perkins loan cancellation
At a glance
- To be eligible, work full time at a qualifying public or nonprofit school that’s in the Teacher Cancellation Low Income Directory; or teach special education, math, science, a foreign language, bilingual education or another subject that has a designated teacher shortage.
- Only borrowers with federal Perkins loans qualify.
- Get up to 100% of your federal Perkins loans forgiven.
Best for: Teachers with federal Perkins loans. However, this already-small program is winding down: Undergraduate borrowers won’t be able to take out Perkins loans after Sept. 30, 2017, and graduate borrowers only have until Sept. 30, 2016, to use the program.
How to get it: Submit an application through the college or university that originally awarded your Perkins loans. After your first and second years in a qualified teaching position, 15% of your balance will be forgiven; 20% will be forgiven after your third and fourth years; and the remaining 30% after your fifth year.
If you’re eligible for Perkins loan cancellation, you’re also eligible for loan deferment during the years you’re working to qualify. Contact your school’s financial aid office to apply.
Combining loan forgiveness programs
If you’re eligible for multiple student loan forgiveness programs, you can take advantage of more than one — just not at the same time.
For example, if you’re eligible for both Teacher Loan Forgiveness and Public Service Loan Forgiveness, you’d have to work in a qualifying position for 15 years (five for Teacher Loan Forgiveness, and an additional 10 for PSLF) to get forgiveness through both programs.
If you have a lot of debt, it could be worth passing on Teacher Loan Forgiveness and getting complete forgiveness through PSLF. But whether or not you take advantage of multiple programs, make the decision that’s best for you based on your student loan balance, the amount of time you plan to teach, and the types of positions you want to have throughout your career, says Alyssa Picard, director of higher education at the American Federation of Teachers.
There are also numerous state- and city-based programs that offer teacher loan forgiveness. Check the American Federation of Teachers’s funding database for more information about these opportunities.
Other repayment options
If you can afford the standard 10-year federal loan repayment plan, stick with it to pay off your loans faster and with less interest than with other federal plans.
But if you’re finding it difficult to repay federal loans and you want to qualify for loan forgiveness, consider an income-driven repayment plan. This plan sets your monthly payment at a percentage of your discretionary income and the loan term is increased from the standard 10 years to 20-25 years. Any remaining loan balance is forgiven at the end of the term, but is considered taxable income.
If you want to save on the total cost of your loan and you have strong credit as well as a steady income, consider student loan refinancing with a private lender. Your current loan will be replaced with a new loan at a lower interest rate and a new term; the shorter the term, the more you’ll save. This option is a good choice for those with private loans or federal student loans — and borrowers who don’t plan to use an income-driven repayment plan, federal loan forgiveness programs or other protections. Consider all options and compare offers before refinancing.