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Teacher loan forgiveness |Subsidized or Unsubsidized?

1 loan rates rise imageThe Teacher Loan Forgiveness Program aims at inspiring people to enter into and continue to remain in the teaching profession.

This program is based on a simple premise:

If you take up teaching full-time with educational service agencies that cater to low-income or economically backward families, and also meet the other required criteria, you can seek a waiver of up to a combined total of $17,500 on your loan.

This loan could either be a Direct Subsidized Loan or an Unsubsidized Loan.

Put in simple words, Teacher Loan Forgiveness implies that, all, or some of the remaining balance of your federal student loan amount is waived off, subject to certain conditions being met.

If your loan amount stands forgiven, you do not have to shoulder the responsibility of repaying the remaining part of your loan.

  • Teacher Loan Forgiveness School List

There is no denying the fact that teachers play a crucial role in the lives of children. What can also not be disputed, is the fact that teachers are grossly underpaid. This is the primary factor that hinders potential good teachers from taking up the profession in the first place, let alone take up a loan to get themselves qualified as a teacher, and, thereafter struggle to repay this loan, owing to low pay structures.

Fortunately, there is the Teacher Loan Forgiveness Program that offers a glimmer of hope. Under this Loan Forgiveness Program, Direct loans and federal Stafford Loans are eligible for Teacher Loan Forgiveness.

Additional requirements needed:

  1. You must be teaching at a low-income elementary or a secondary school.

  2. Loans that came into effect prior to October 1, 1998 will not be considered for waivers.

  3. You should have no default on your loans.

  4. You should work full-time as a teacher for five consecutive years.

  5. You must be qualified with a state certification and hold a license in the state that you teach in. This certification puts you into the cadre of a highly qualified teacher.

1 qualified teachersHighly qualified teachers can receive a loan forgiveness up to $5,000.

Here again, if you are a highly qualified teacher and teach math, science or work in a special education program, you are eligible for Teacher Loan Forgiveness of upto $17,500.

  • Teacher Loan Forgiveness Application

Trying hard not to default on your loan, while at the same time struggling to keep yourself afloat because of the poor pay scales that exist in the teaching profession? This is where the Teacher Loan Forgiveness Program appears as a silver lining.

Let us read about the application process to avail of the Teacher Loan Forgiveness:

  1. The Teacher Loan Forgiveness application can only be done once you have completed teaching at a school, that caters to the economically weaker sections or at a special requirements school for five consecutive years.

  2. Once you are sure you have met this requirement, go ahead and complete the Teacher Loan Forgiveness Loan Applicationform.

  3. The Forgiveness Loan Application has a certification section that must be completed by the chief administrative officer of the school in which you carried out your qualifying teaching service.

  4. In case you taught at more than one school during one academic year, the certification section has to be completed by the chief administrative officer from any one of the schools.

  5. In the event that you taught at different schools during different academic years, your eligibility for teacher Loan Forgiveness must be certified by the chief administrative officer of all the schools.

  6. In case you have to provide more than one chief administrative officer’s certification, the additional ones can be done on a separate sheet of paper. But, all of the certifications have to be duly submitted along with your completed application.

  7. The completed Teacher Loan Forgiveness application must be returned to your loan holder or loan servicer.

  8. Given the scenario, that you are applying for Teacher Loan Forgiveness that are serviced by more than one loan holder, a separate form has to be submitted to each of them.

  • Student Loan forgiveness for Public Service

The Student Loan Forgiveness for Public Service entitles you for loan forgiveness, if,you are employed with a government or no-profit establishment provided, that you have made 120 qualifying monthly payments towards repayment of your loan. Here, it is not about the work that you do, but about the organisation that you are employed with. Hence, the specification that the employer must be either a government or a not for profit institution.

Criteria for Student Loan Forgiveness for Public Service:

  1. You have to be a full-time employee. By this, it means that your application will be considered only if you satisfy your employer’s definition of full-time or you work at least thirty hours a week, whichever is higher.

  2. In case you happen to be part of more than one organisation, you can meet the full-time work requirement by working for a combined average of thirty hours a week with your employers.

  3. Do keep in mind, that borrowers who are employed with non-profit organisations cannot consider their time spent on religious services; worship services etc. to meet the full-time employment criteria.

  4. Point to be noted here, the 120 qualifying monthly payments towards repaying your loan, do not have to be consecutive.

  5. Do realise, that it will take you at least ten years to become eligible for the Student Loan Forgiveness simply because of the 120 qualifying payments condition.

  6. After your 120th payment, you will have to submit the Public Service Loan Forgiveness form for your request to be considered.

  7. Loans that are waived off under this program are exempted from federal income tax.

1 student standing graduatingIn case you are wondering which of the loans are eligible for Student Loan Forgiveness, it is any loan that you received under the William D. Ford Federal Direct Loan (Direct Loan) Program.

Loans from other federal student loan programs, such as the Federal Family Education Loan (FFEL) Program or the Federal Perkins Loan (Perkins Loan) Program, do not qualify for Public Service Loan Forgiveness. These can be eligible if they are consolidated into a Direct Consolidation Loan

Do keep in mind, only the qualifying payments that you make to the new Direct Consolidation Loan can be considered as part of the 120 payments required for Public Service Loan Forgiveness.

  • Teacher Loan Forgiveness Texas

Under theTeacher Loan Forgiveness Texas program, the Texas Education Agency (TEA) submits a list of teacher shortage areas based on subjects along with a list of low-income schools to the U.S. Department of Education.

Teachers who have availed of particular types of student loans can apply for either partial forgiveness, deferment or even cancellation benefits.

Eligibility for these waivers entirely depends on the type of loan that you have availed of; the date of your first loan; and of course, if you are employed with a low-income school or contribute to the subject matter shortage area.

In the event that you meet the above stipulations, only teachers can apply for either of the forgiveness programs listed as under:

  1. Federal Teacher Loan Forgiveness

  2. TEACH for Texas Loan Repayment Assistance

  3. Public Service Loan Forgiveness

  4. Federal Perkins Loan Teacher Cancellation

You can start the loan forgiveness process at the start of your first year of teaching service. You will need to coordinate with the University that provided you the loan.

1 Students graduating dayAll education staff and non-teachers can apply for Loan forgiveness under the following:

  1. Public Service Loan Forgiveness

  2. Federal Perkins Loan Cancellation for Special education

In case you are a special education teacher, you must be certified by an official at the public or non-profit elementary secondary school which states that you are teaching special/handicapped or differently abled students.

  • Obama Student Loan Forgiveness for teachers

Originally the William D. Ford Direct Loan program, the title Obama Student Loan Forgiveness Program came into being when President Obama reformed part of the Direct Loan program in the year 2010.

Key point here to remember is that all these programs are offered for federal student loans. Private loans cannot avail of these benefits.

Let us look at some of the changes that were made by President Obama

  1. No subsidies will be given to private lending institutions by the federal government.

  2. Beginning in 2014, new borrowers will be eligible to make payments based on 10% of their discretionary income.

  3. New borrowers can also apply for student loan forgiveness once the complete 20years instead of the original 25years.

  4. The funds will be used to support minority/ economically backward students and to improve college funding.

  • Benefits of the Obama Student Loan Forgiveness Program

Under this facility, you can consolidate all your federal loans into one new loan and then you can choose a repayment plan that suits you.

Here you can choose from five repayment plans:

  1. Standard Repayment: You have to pay a fixed amount every month, for the life of the loan. This amount depends on your borrowed amount; interest rate and the term for which you have borrowed.

  2. Graduated Repayment: You can make payments that are lower than the standard repayment plan, but this will increase gradually every two years.

  3. Income Contingent (ICR): You can make payments based on your income level; number of family members; loan balance and the interest rate [PDF] The Basics of Interest Rates – EcEdWeb

  4. Income Based (IBR): You make your payments based only on your income and family size. Here the balance of your loan and the interest rate are not used to calculate your monthly repayment.

  5. Pay as You Earn(PAYE): This option allows for the lowest monthly payment. Based on your monthly income, it asks for 10% of your discretionary income as payment.

  • Teacher Loan Forgiveness after 10 Years

The Teacher Loan Forgiveness program is undoubtedly beneficial as teachers are eligible for reduction on principal and an early ten-year forgiveness.

If you are a teacher with the required qualifications, you can apply for a principal reduction beginning from $5,000 to $17,500 along with a complete forgiveness after a 10-year period. At the end of ten years, any unpaid balance is totally waived off.

1 interest-rates for studentsMore often than not, teachers are eligible for both and avail of benefits from both.

So what Gets You Eligible to avail of this?

  1. Your Federal Student Loan should have come into effect only after October 1, 1998.

  2. You have not defaulted on your subsidized or unsubsidized loan repayment. In case you have, you will not qualify for loan forgiveness, unless you have made agreeable repayment arrangements with that particular loan holder.

One way of getting out of a default situation, is to consolidate your loans.

  1. If you are seeking forgiveness or principal reduction, you must do so prior to completion of the five years as a teacher.

  2. In the event that you have spent time availing benefits through AmeriCorps, this period cannot be counted as part of the required five year teaching period for loan forgiveness.

  3. You have to complete five full academic years as a full-time teacher and at the least, one of those years must be after the 1997-1998 school year.

  4. Employment at an elementary or secondary school is mandatory.

  • Teacher Loan Forgiveness Sallie Mae

Sallie Mae, one of the major private student loan lenders in the USA offers several student loan plans to undergraduate, graduate and professional students. Founded in 1972, borrowing from Sallie Mae can prove to be beneficial for students who intend taking up teaching after graduation.

Eligibility for Sallie Mae Teacher Loan Forgiveness:

To apply for the Sallie Mae Teacher Loan Forgiveness, you must fulfil certain conditions:

  1. You have to complete a specified term of service at a designated low income school or a non-profit school for at least five continuous years.

  2. If you are a teacher in any of the high demand study area. This includes subjects such as science, math and bilingual courses.

  3. If you are employed at a school that admits disabled children or as an early childhood educator.

  4. You must be a full-time teacher.

  5. You provide a certification from your school’s Chief Administrative Officer.

  6. In case you teach at more than one school, you can still apply for the Sallie Mae teacher loan forgiveness.

  7. You should be employed work at schools recognized by this cancellation program.

1 student-debt-money on tableOver and above these, you must meet certain general requirements such as:

  1. You must make 120 payments while employed at a designated low-income school.

  2. These payments have to be made after October1, 2007.

  3. Only Federal Stafford, Parent Pus, Graduate PLUS and Federal Consolidation Loans are eligible. Federal Perkins, federal nursing and other health education loans do not qualify.

  4. Loan forgiveness is not offered on any default loan.

  • Teacher Loan Forgiveness Forbearance

If for some reason you are unable to make your scheduled loan payments, but not eligible for a deferment, the servicer may be able to grant you a forbearance.

With forbearanceyou can stop making payments, or, reduce your monthly payments for upto 12 months. Interest continues to accrue on your subsidized and unsubsidized loans.

There are two types of forbearances:

  1. Discretionary – Here your lender can decide if he wants to grant you a forbearance or not.

  2. Mandatory – If you meet the required criteria, your lender has to grant you forebearance.

Let’s hope everything we have listed here helps in your quest to have your loan forgiven. Remember there is nothing like research to help you with sorting out your financial crisis, however daunting it may seem!

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