Teachers: Which Student Loan Forgiveness Program is Right for You?

March 5, 2020

If you’re a teacher with student loan debt, you’re not alone. Over two-thirds of educators borrow to attend school, and the majority have advanced degrees in addition to bachelor’s degrees. The average loan debt for a teacher with a master’s degree is $50,000, an amount that can seem overwhelming on a teacher’s salary.

The good news is that there are several federal student loan forgiveness programs that are available to teachers today. The requirements around these programs can be confusing, but at Summer, we’re honored to work with thousands of educators on a daily basis. We’re ready to help you get started!

The two biggest federal loan programs for teachers are Teacher Loan Forgiveness and Public Service Loan Forgiveness. Many teachers will qualify for one and not the other, but if you qualify for both, you may need to choose between them. The same years of teaching can’t count toward both programs. But don’t worry—we’ll start by taking a closer look at each program, then help you compare them to make an informed choice.

Teacher Loan Forgiveness

After five years of qualifying teaching, you can either receive $5,000 or $17,500 of forgiveness on federal loans through Teacher Loan Forgiveness!

The amount you’re eligible for depends on which subject you teach. You can receive a maximum of $17,500 in forgiveness if you teach:

  • Special education to elementary or secondary school students
  • Mathematics to secondary school students
  • Science to secondary school students

You can receive a maximum of $5,000 in forgiveness if you teach elementary or secondary school students in another subject area.

How can I qualify?

The employment requirements for Teacher Loan Forgiveness are more narrow than they are for Public Service Loan Forgiveness. For five consecutive years of teaching, you will need to meet the below requirements:

  • You must be a full-time teacher:  This is defined as someone who provides direct classroom instruction at an elementary school, secondary school, or educational service agency that serves low-income students. At least one of your years of teaching needs to be after the 1997-1998 academic year.
  • Your school must be eligible: To find out if your school is eligible, you can search the Department of Education’s Directory. The Dept. also notes that “all elementary and secondary schools operated by the Bureau of Indian Education (BIE)—or operated on Indian reservations by Indian tribal groups under contract with BIE—qualify as schools serving low-income students.”
  • You will need to be a “highly qualified” teacher. In most cases, the Department of Education defines this as a teacher who 1) has a bachelor’s degree and 2) is state-certified. You won’t qualify if your certification or license has ever been suspended.
  • Your loans cannot currently be in default. If your loans are in default right now, getting them out should be your first priority. There are a few options available to you, and you’re welcome to contact us for help.
  • Only FFEL and Direct loans are eligible. If you had outstanding FFEL or Direct loans as of Oct. 1, 1998, you won’t be eligible. And if you took out new FFEL or Direct loans while you had an outstanding balance on your older loans, you also won’t be eligible. This requirement can be a bit confusing, but there’s more information at Federal Student Aid.

Perkins loans don’t qualify for Teacher Loan Forgiveness or Public Service Loan Forgiveness, but they have their own separate cancellation program. Teachers can qualify to have the full amount of their Perkins loans forgiven after five years of service—you can read more about the details at Federal Student Aid.

How does it work?

The good news is that if you meet the requirements above, the application process is simple. At the end of five years of teaching, you’ll submit a form signed by both you and your employer to the Department of Education and your loan servicer.

If your loan balance (and the interest you would accrue) would be completely eliminated by the $5,000 or $17,500 in forgiveness you would receive, you can also request a special forbearance so that you don’t need to make payments during your five years of qualifying teaching.

Public Service Loan Forgiveness

After ten years of making qualifying payments and working in public service, you can have the remainder of your federal loan balance forgiven through Public Service Loan Forgiveness. Notably, there’s no cap on the forgiveness amount!

Unlike Teacher Loan Forgiveness, which doesn’t have a minimum number of payments, Public Service Loan Forgiveness requires ten years (120 months) of qualifying payments before you receive forgiveness.

How can I qualify?

  • You work at a qualifying employer. This could be a governmental organization (such as a public school), a 501(c)(3) non-profit (such as a private school), or certain private non-profit organizations.
  • If you work at a public school but are not a teacher, you would be eligible for Public Service Loan Forgiveness!
  • You have Direct loans. This is really important. Only Direct loans qualify for Public Service Loan Forgiveness. Payments made on any other types of loans won’t count toward the 120 required payments.
  • You’re in an income-driven repayment plan. Income-driven repayment is an umbrella term for several federal repayment plans that all have monthly payments calculated based on your income and family size.
  • You make 120 qualifying monthly payments. To qualify, a monthly payment needs to be made:
  • While you’re working for a qualifying public service employer
  • On a qualifying repayment plan (any of the income-driven repayment plans)
  • On a Direct loan
  • On time and in full

Our article on Public Service Loan Forgiveness goes into more detail on the requirements for qualifying payments—there’s a bit more complexity involved and we’re always here to help if you have questions along the way.

Perkins loans don’t qualify for Teacher Loan Forgiveness or Public Service Loan Forgiveness, but they have their own separate cancellation program. Teachers can qualify to have the full amount of their Perkins loans forgiven after five years of service—you can read more about the details at Federal Student Aid.

How does it work?

There are two forms involved in Public Service Loan Forgiveness – the employment certification form and the forgiveness application. You’ll submit the employment certification form along the way as you make payments, and you’ll submit the forgiveness application when you’ve made 120 payments are you’re ready for forgiveness.

The forms are pretty similar—they’ll both be signed by you and your employer to confirm that you’re working at a qualifying public service organization.

We recommend submitting a new employment certification form once a year or whenever you change jobs. Every time you submit a new form, the count of your qualifying payments will be updated. Payments are occasionally miscounted, so submitting the form on a regular basis helps ensure that the count is accurate.

We understand that this is a lot of information to absorb. If you have any questions along the way, reach out. You can also learn more about best practices, in our article on Public Service Loan Forgiveness here.

Which Program is Right for Me?

If you qualify for both programs, there are a few factors to consider in deciding which one makes the most sense for your situation. Although you can’t use the same period of teaching towards both Teacher Loan Forgiveness and Public Service Loan Forgiveness, it’s helpful to remember that you don’t have to decide right away! If you’re meeting all the requirements for both programs, you can wait until you’re ready to apply for forgiveness.

Here are a few of the differences side by side:

Teacher Loan Forgiveness vs. Public Service Loan Forgiveness

Because the two programs have such different requirements, choosing one program over the other depends on several different elements of an individual borrower’s situation.

If you…

  • Have a loan balance under $30k
  • Have already been teaching for several years or don’t plan to continue teaching
  • Have FFEL loans or aren’t in an IDR plan
  • Qualify for the full $17,500 under Teacher Loan Forgiveness (you teach special education or secondary school math or science)

Then it might make sense to pursue Teacher Loan Forgiveness!

If you…

  • Have a loan balance over $50k
  • Have Direct loans
  • Qualify for a lower monthly payment with IDR or are already in an IDR plan
  • Plan to teach (or work in public service) long enough to get forgiveness

Then it might make more sense to pursue Public Service Loan Forgiveness!

If you have an account with Summer, we’re happy to work with you more closely on your individual situation and which program might make sense. Feel free to chat with us or send us an email at hello@meetsummer.org!

Continue reading