Is Teacher Loan Forgiveness Your Best Option?

Dori Zinn Published on October 3, 2019

teacher loan forgiveness

Teachers don’t get into the profession for the money; they teach because they love it. The average annual salary for a teacher in America is around $59,000, depending on the grade, subject, and location of where they teach.

In 2016, graduates averaged nearly $30,000 in student loans, according to The Institute for College Access & Success (TICAS) — the most recent figures available. That means on a teacher’s salary, paying off loans isn’t going to happen quickly. And in some cases, they might not be able to afford monthly payments.

But teachers have a few different relief options, including the Teacher Loan Forgiveness Program. Before you take advantage of it, make sure you know what you need to qualify and what other programs are available.

What is the Teacher Loan Forgiveness Program?

The Teacher Loan Forgiveness Program allows full-time teachers who have been working in a low-income school for at least five years to have some or all of their student loan debt forgiven.

All teachers should have at least a Bachelor’s Degree and have a state certification to teach. You should also check to see if your school is in the Teacher Cancellation Low Income directory.

The program forgives up to $17,500 on Direct Loans and Federal Stafford Loans. PLUS Loans and Perkins Loans are not eligible.

Keep in mind that not all teachers are eligible for up to $17,500 in forgiveness. That amount is good for qualified math or science teachers at the secondary level. Special education teachers responsible for teaching children with disabilities are also eligible. Other teachers can receive up to $5,000 in forgiveness.

Alternatives to the Teacher Loan Forgiveness Program

If you don’t qualify for teacher loan forgiveness or need other assistance, there are additional programs for you, including:

  • Public Service Loan Forgiveness (PSLF): This program launched in 2007 and the first round of borrowers eligible for forgiveness was in 2017. While only 1% of applicants have been approved, you’re allowed to get PSLF and Teacher Loan Forgiveness at the same time. If you’re a teacher who is only eligible for $5,000 in forgiveness, you may still be able to get your loans forgiven through PSLF. Keep in mind that you’re eligible for PSLF after 10 years of qualified payments and Teacher Loan Forgiveness after 5 years, so it could take longer to have your loans forgiven. This means you’ll pay more money over the life of the loan as you await forgiveness.
  • Federal Perkins Loan cancellation: You have the chance to get 100% of your Perkins Loans canceled if you qualify. Only Perkins loans are available for cancellation and you need to teach in a school serving low-income students. You can teach any subject or be a special education teacher. For each school year you teach, you’re eligible to have a portion of your loans canceled: 15% for the first and second years, 20% for the third and fourth years, 30% for the fifth year.
  • Income-driven repayment (IDR) plans: These plans allow you to repay your loans based on a portion of your discretionary income — either 10% or 20% — and your family size. After 20 or 25 years (depending on the plan you choose) the remaining loan balance is forgiven. You need to be on an IDR plan to qualify for PSLF, so the sooner you get on one, the sooner you’ll be able to apply for PSLF.
  • State and local programs: The American Federation of Teachers has a database that you can search for resources near you. Some programs are ongoing and some have deadlines, so make sure you check out the ones that have due dates and see if you qualify for aid. You may qualify for many different types of local programs at once.
  • Direct Loan Consolidation: This loan is offered only for qualifying federal student loans. It can be difficult to keep track of many different types of loans, interest rates, servicers, and due dates. When you consolidate, you only make one monthly payment and the interest rate is the weighted average of all your interest rates rounded up to the nearest one-eighth percent. Not all federal loans qualify, and you can’t include private loans in consolidation. If you consolidate, you can still qualify for federal student loan programs and benefits like loan forgiveness.
  • Refinancing: Whether you have federal or private student loans, you can sometimes pay them off faster by refinancing. Refinancing means you’ll take out a new loan to pay off your current loans, then make one monthly payment to your new loan. You’ll get a new interest rate based on your income and credit score. Since there’s no federal refinancing option (only consolidation), refinancing rates vary by lender. If you’ve taken care of your credit, you may qualify for a very low interest rate. You’ll want to compare lenders and terms first. Use Purefy’s rate comparison tool to check out the best options for your finances. Keep in mind that if you refinance, you will lose federal benefits — including the forgiveness options mentioned in this article.

Before making your decision, be sure to thoroughly consider each option first. You may decide a mix of these options is best for you. You should definitely explore forgiveness and cancellation first if you’re eligible. Whether it’s a federal or local program, you have a few ways to go about getting help for teacher loan forgiveness. Then move onto other methods, like sticking to an income-driven repayment plan or consolidation and refinance. You might not have one perfect fit, so take the time to find the right tools for your circumstances.