Updated June 23, 2018

Loan Forgiveness for Teachers: What Are Your Options?

Read more about Student Loan Forgiveness

If you're a teacher, you could be eligible for several loan forgiveness programs. Here are the different options available.

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Like most new graduates, you probably have more than $30,000 in student debt. If you are a teacher and that's around your starting salary, what are you supposed to do?

It's possible that you can make some changes so your loans won't feel insurmountable while you work your way up in your new career. As a teacher, you have more options than other graduates because of your profession.

  • You can lower your payments by restructuring your debts through one of the four income-driven repayment plans. That's the upside. The downside is you pay more interest over time.
  • Another option is getting your loans forgiven altogether. This is a real possibility if you're a teacher.

Read on to see your advantages as a teacher borrower, depending on what kind of loan you took out before you started your schooling.

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Did you know: Teachers with student loans can apply for the Teacher Loan Forgiveness Program. You'll need to teach 5 consecutive years at an eligible school or agency and meet other criteria. Those who qualify can earn forgiveness for up to $17,500 in subsidized and unsubsidized loans.

Do You Have Federal Perkins Loans?

We'll start with the easiest loan forgiveness option. If you have one or more Federal Perkins loans, read on. If you aren't sure, log into the National Student Loan Data System to see what loans you have. Keep in mind that not all schools participate or offer Federal Perkins loans. You will want to speak with your school's financial aid office after completing the FAFSA and understand your options.

Do you meet the following requirements?

  • You teach full-time in a low-income school
  • You taught for least one full academic year
  • You work part-time at two low-income schools simultaneously

If you don't teach at a low-income school but meet one of the following requirements, you may qualify:

  • Teach math, science, foreign language, or special education
  • Teach any subject which your state qualifies as a subject with a shortage of teachers
  • Teach at a non-profit school with nonprofit status

If you meet the above requirements, you may qualify for the following:

  • 15% of your Federal Perkins loans forgiven after your first and second year of teaching
  • 20% of your Federal Perkins loans forgiven after your third and fourth year of teaching
  • 30% of your Federal Perkins loans forgiven after your fifth year of teaching

If you teach for five consecutive academic years, you stand to have 100% of your Perkins loans forgiven.

This is just the start. Keep reading to see what other loan forgiveness plans you may qualify for.

Don't qualify? Most loan forgiveness for teachers require that you work in a low-income school. If you don't qualify, consider student loan refinancing. It can help make your payments more manageable because you can potentially get a lower interest rate and better term options. This could save you thousands in interest. At least check out rates to see if they're better than what you're currently getting.

Do You Have Direct Student Loans?

If you have student loans under the Direct Loan program (loans from the Department of Education) or Federal Family Education Loans (FFEL), you could be eligible for up to $17,500 in student loan forgiveness. Keep in mind FFELs ended in July of 2010 and before then not everyone was eligible or qualified for the program. Speak with your loan servicer to find out if you have any FFELs.

Remember there are two types of Direct loans: Subsidized and Unsubsidized. While you're in school the subsidized loans have an interest subsidy. The interest subsidy helps you in since the DOE pays the interest for the time you're in school. Six months from your separation or graduation date you will then start to accrue interest. Unsubsidized loans begin accruing interest from the first day of the course. Even paying $5 to $20 a month towards your interest can greatly reduce your student loan debt.

Do You Meet the Following Requirements?

  • You've worked full-time in a low-income school for 5 consecutive years
  • At least one year you taught is after the 1997-1998 school year
  • Your student loans aren't in default

Note: Default occurs when you miss your loan payment for 270 consecutive days. Your loans will enter into collections at 360 days past due. Don't let this happen. There are always options if you find yourself struggling to make payments call your loan servicer.

If you meet these requirements and have loans other than PLUS or Perkins loans, you may qualify for Teacher Loan Forgiveness.

Teachers in an elementary school or secondary school may receive up to $5,000 in loan forgiveness. Teachers in a secondary school who teach a highly qualified subject may receive as much as $17,500 in student loan forgiveness. A highly qualified subject includes mathematics, science, or special education.

Here's the catch though - you must teach in a field you majored in during college.

"Highly qualified teacher" means you have a teacher state certification. Although the name sounds intimidating, it's something most teachers are anyway.

Do You Have More Student Loans Left?

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As you sit and tally up your student loans, you may wonder what you will do with the remaining loans. Perkins loans only offer up to $5,500 per year. You may have much more than $5,000 in Direct Loans too. There's one more option - the Public Service Loan Forgiveness program.

Remember you can use a forbearance or a deferment for your student loans. A forbearance can postpone your loan for up to three years at 12 months at a time. This will help to suspend your loan payments while you're starting your teaching career. A deferment is valid for up to three years and can be used for six months at a time. A deferment can be used for unemployment, underemployment, and other financial hardships.

Do You Meet the Following Requirements?
This program isn't just for teachers. But teachers can qualify for it. In order to qualify, you must:

  • Work in the public service sector for 10 years
  • Make payments on your loans for 10 consecutive years (120 qualifying payments)

You can check your eligibility with the Department of Education yearly. We also recommend completing the PSLF Employment Certification Form every year from Federal StudentAid (FSA). This helps the DOE track your progress.

This program doesn't require you to work at a low-income school, though. If you didn't qualify for the Perkins Loan Cancellation or Direct Loan Forgiveness, this could be a better option.

There's a catch: You need to be on an income-driven repayment plan. It's not a requirement, but it's the only way the forgiveness plan will benefit you. If you stay on the standard repayment plan, you pay your loans off in 10 years. There's nothing for the DOE to forgive.

An income-driven repayment plan, on the other hand, lowers your payments according to your income. There are 4 options:

  • Income-based repayment: Your payment is 10% of your discretionary income. This payment must be lower than the standard payment to qualify.

  • Pay as you earn: Loans originated after October 1, 2007, and with a disbursement after October 1, 2011, qualify. Your payment is 10% of your discretionary income. This payment must also be lower than your standard payment to qualify.

  • Revised pay as you earn: You pay 10% of your discretionary income, but there aren't any date restrictions. There also aren't any payment caps. Your payment increases as much as your income increases.

  • Income contingent repayment: You pay either 20% of your discretionary income or a 12-year fixed payment. The servicer chooses the lower of the two payments for you.

Each of these programs offer loan forgiveness after 20-25 years. But if you meet the above requirements for the PSLF, your loans may be forgiven in as little as 10 years.

Check Your State's Offerings

There's still one more option. Your state may offer loan forgiveness for teachers. Areas with a high need for qualified teachers often have additional help. Check the American Federation of Teacher's database to see what your state offers.

A few examples of what states offer right now include:

  • Illinois
    Illinois offers the Illinois Teacher's Loan Repayment Program. It is a grant to graduates who teach in low-income areas. In order to qualify, you must have a portion of your student loans forgiven in the Teacher Loan Forgiveness Program. You may be eligible for an addition $5,000 in loan forgiveness if you qualify.

  • Oklahoma
    Oklahoma offers the Teacher Shortage Employment Program. This provides secondary school teachers who teach math or science additional loan forgiveness. You must teach at a public secondary school for at least 5 years to qualify.

  • Tennessee
    Tennessee offers the Tennessee Math and Science Teacher Loan Forgiveness Program. This funding helps public school teachers obtain an advanced degree in math or science. You must work at a Tennessee public school for 2 consecutive years to qualify.

Research Your Options

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A final piece of thought is the option for federal student loan discharge. Discharges can occur for multiple reasons such as the school that you attended closed down, or you received false certification from the college you attended. Just make sure to do your due diligence when it comes to you and your loans.

If you are unable to utilize any of the above options, you can always refinance your loans to a lower interest rate. Refinance is a great option if you have a mix of private and federal loans and want a lower interest rate. When refinancing you may want to apply with a creditworthy cosigner to get a better chance at a lower interest rate. Check out rates to see if it's better than what you're currently getting.

As a teacher, you have many loan forgiveness options at your disposal. Be careful, though, as they don't always work together. For instance, consolidating your Perkins loans could be a mistake. Consolidation could make you ineligible for the Teacher Loan Cancellation program. You may benefit from keeping them separate if you consolidate other loans.

We recommend looking at each option we discussed above in depth. Then you can formulate a plan. Talk to your loan servicer to see which options may pertain to you. Your loan servicer can then help you calculate where you would reap the largest savings.

Always keep in mind throughout all your decision-making: It's possible you could have a large portion of your loans forgiven. But the longer you pay on them and wait for forgiveness, the more interest you'll pay.

So, see where you could save the most money not only monthly, but in the long run. Then you can determine the payment that works the best for you.

Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

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