Student loan forgiveness, discharge or cancellation means that you are no longer required to repay some or all of your loans. Forgiveness and cancellation are the terms used in connection with loan relief due to your job, whereas discharge refers to personal circumstances such as a permanent disability or closure of your school.
Federal student loan forgiveness is available for certain specific reasons. However, it is not available for these reasons:
- You are not happy with the education you received (unless you qualify for borrower defense to repayment).
- You were a minor when you took the loan.
- You cannot find a job in your field of study.
Nonetheless, there are several circumstances that can result in discharge/forgiveness/cancellation of your student loan, and in this article we’ll explore loan forgiveness for teachers.
Teacher Loan Forgiveness for Direct Student Loans
This section applies to Direct Subsidized and Direct Unsubsidized Loans. You can qualify for Teacher Loan Forgiveness (TLF) if you teach full-time for five consecutive and complete academic years at a qualifying educational service agency or low-income school. The maximum amount forgiven on your loan is $17,500.
Highly Qualified Teachers
You must be a highly qualified teacher to be eligible for TLF. All teachers must meet the following requirements to be highly qualified:
- You have a bachelor’s degree or higher.
- You’ve received full state certification via a state teacher licensing examination, charter school law, or alternative methods.
- You haven’t had your licensure or certification requirements waived on a provisional, temporary, or emergency basis.
In addition, new elementary school teachers must meet the following requirements:
- You have demonstrated teaching skills and subject knowledge in math, reading, writing, and other basic curriculum areas.
- You can demonstrate the requisite skills through rigorous state tests in the required areas.
If you are a new middle or high school teacher, you must meet the following requirements to be considered highly qualified:
- You have demonstrated a high competency level in each subject you teach.
- One way to demonstrate high competency is by passing a rigorous state academic subject test in each subject that you’ll teach.
- Alternatively, you can complete an undergraduate major, graduate program, equivalent course work, or advanced credential/certificate in each of your subjects.
If you are not a new teacher, you can be designated as highly qualified if you:
- Meet the same requirements as those for a new teacher, and
- Pass a uniform, high, and objective standard set by the state.
Additional TLF Requirements
Additional requirements include:
- You cannot have had an unpaid balance on a Direct Loan.
- You must apply for TLF before the end of your fifth consecutive year of qualifying teaching service.
- Qualifying schools must be listed in the Annual Directory of Designated Low-Income Schools for Teacher Cancellation Benefits.
The $17,500 amount of forgiveness is for highly qualified teachers of mathematics and science at secondary schools, or special education teachers who help children with disabilities. All other highly qualified teachers can receive up to $5,000 in loan forgiveness.
Apply for TLF by submitting the Teacher Loan Forgiveness Application to your loan servicer. The form must be certified by the school’s chief administrator.
Public Service Loan Forgiveness
The Public Service Loan Forgiveness (PSLF) Program provides loan forgiveness if you work for a governmental or not-for profit 501c organization. This includes full-time employment by the Peace Corps and AmeriCorps. The forgiveness can extend to any type of job, including teaching. PSLF applies to Direct Loans and Direct Consolidation Loans.
Additional requirements for PSLF include:
- Working full-time at your employer, a minimum of 30 hours per week. If you work part-time at two or more qualified employers, you are considered full-time if you work at least 30 hours per week.
- Repaying you loan by way of an income-driven repayment plan.
- Making 120 qualifying payments. A payment is qualifying if you pay the full amount no later than 15 days after the due date. You can’t make qualifying payments when you have in-school status or are in a grace, forbearance, or deferment period. The payments do not have to be consecutive.
If you meet all the requirements, your remaining loan balance will be forgiven after you make the 120th payment. The IRS does not consider the forgiven amount to be income, so you will not have to pay taxes on the forgiven amount.
Potentially, you can receive TLF and PSLF, but you count double-count your teaching periods. That is, any payments that you applied to one program cannot also be applied to the other.
You can employ for PSLF by completing, certifying, and submitting the Employment Certification Form to FedLoan Servicing, which is the Department of Education’s loan servicer for the PSLF program.
Perkins Loan Cancellation
The Perkins Loan Program expired on September 30, 2017. This section is for borrowers who began repayment before that date. Perkins Loans were subsidized federal student loans available to undergraduate, graduate, and professional students.
A Perkins Loan can be cancelled for eligible volunteer service or employment, including teaching. Perkin Loans can also be discharged under specific circumstances. You can cancel 100% of your Perkins Loan if you teach full-time at a public or nonprofit elementary or secondary school that serves low-income families, or as a special education teacher, or as a teacher of science, math, foreign language, bilingual education or other fields as determined by your state.
A portion of your loan (including accrued interest) is cancelled for each year you teach full-time, as follows:
- 15% cancelled per year for Years 1 and 2 of service
- 20 percent cancelled per year for Years 3 and 4 of service
- 30 percent cancelled for Year 5 of service
Full or partial Perkins Loan cancellation can occur for the many types of service. The ones that pertain to teaching are:
- Early childhood education provider
- Employee at a child or family services agency
- Faculty member at a tribal college or university
- Librarian with master’s degree at Title I school
To apply for Perkins Loan cancellation or discharge, submit the lending school’s forms to the school or to its Perkins Loan servicer.