Educators are some of the most vital and important people in the world. They shape the mind of our youths and help us all become wiser. But to become teachers, many Americans rack up thousands of dollars in student loans, then go to work and earn less than they could in the private sector. However, teachers have opportunities for debt relief through government assistance, including student loan forgiveness programs. We will show you how FAFSA loan forgiveness for teachers works and how you can benefit from it.
FAFSA Loan Forgiveness for Teachers
There are two types of FAFSA loan forgiveness for teachers: the Public Service Loan Forgiveness (PSLF) and the Teacher Loan Forgiveness Program.
Teacher Loan Forgiveness
Teacher Loan Forgiveness is a federal program for educators working in low-income schools that can forgive student loans up to $17,500. You may qualify if you:
- Are employed as a full-time teacher for at least 5 consecutive years.
- Work at an elementary or secondary school or an agency that serves low-income students.
- Have direct federal student loans or Stafford loans that are not in default.
This program is only available to “highly qualified teachers,” which the U.S. Department of Education defines as someone who has earned at least a bachelor’s degree, received full state certification as a teacher, and does not have any licenses or certifications waived.
The total rebate of $17,500 is reserved for highly qualified high school math or science teachers or special education teachers. All other eligible teachers can receive up to $5,000 in loan forgiveness under this program.
Public Service Loan Forgiveness
Public Service Loan Forgiveness (PSLF) is a loan forgiveness program for public sector employees, like those in the public and non-profit sector, as well as for teachers. After you make 120 qualified monthly student loan payments, a minimum of 10 years, the government cancels your student loan balance. To qualify, you must:
- Work full-time in a government institution (tribal, state, local, federal) or non-profit organization
- Have eligible federal student loans included in an income-based repayment (IDR) plan
- Make 120 qualifying loan payments.
Federal direct loans are eligible for the PSLF. If you have a Federal Family Education Loan (FFEL) or a Perkins Loan, you must convert it to a Direct Consolidation Loan to qualify for the PSLF. Your loans must also be included in an eligible repayment plan.
However, if you made payments using the wrong loan type or payment schedule, all is not lost. The Department of Education has announced temporary changes that will allow borrowers to count many of these payments. As long as you worked for a PSLF-eligible employer, any payments made during that time can count toward the 120 payments needed to be forgiven.
To ensure that all your payments are accounted for, some borrowers may need to submit a PSLF form by October 31, 2022. Borrowers whose loans do not qualify may also need to consolidate their debt by the same date. . Visit the Federal Student Aid page for detailed information on what is required.
Can I Get Both Forgiveness Options?
Yes, you can qualify for PSLF and Teacher Loan Forgiveness if you qualify for both. Although you may be eligible for both programs, you must complete two separate periods of instruction. For example, if you apply for the FAFSA loan forgiveness for teachers after 5 years and that money is granted, you cannot claim the same 5 years from the PSLF.
To qualify for the PSLF, you must make 120 additional qualifying payments after you cancel your teacher loan. Generally, you must make payments for about 15 years to receive any type of forgiveness.
How to Apply for the FAFSA Loan Forgiveness for Teachers Program
To apply for the FAFSA Loan Forgiveness for Teachers, you must submit the Teacher Loan Forgiveness Application to your loan officer. Your school or educational institution must attest to your certification. If you have several loans with different loan servicers, you will have to complete an application for each one.
Before applying for PSLF, you can verify your eligibility using the PSLF Help Tool and the Certification of Employment process. These two points serve as a guide to ensure you are on the right track. Instead of assuming you have made enough payments or worked for the right employer, these tools confirm you are doing it right.
When you are ready, you can mail or fax your completed PSLF form to the US Department of Education.
State Student Loan Forgiveness Programs for Teachers
If you do not qualify for federal forgiveness programs or are seeking additional help, you may be eligible for state assistance.
Each state has different forgiveness programs and eligibility requirements. The American Federation of Teachers offers a searchable database to find forgiveness options in your state. You can search by class position, grade level, subject, and more.
It’s important to read all of your different options at the state level. You may qualify for several different forgiveness programs, but you may not be able to apply to all of them. Talk to your loan officer about the best options for you based on where you live, the type of loan you have, and the amount you owe.
Alternatives to the FAFSA Loan Forgiveness for Teachers Program
Not everyone is eligible for the FAFSA loan forgiveness for teachers. Whether you work at a different type of school or need a little more help, there are other ways to reduce the burden of student loans.
Income-driven Repayment (IDR) Plans
IDR plans are available to federal student loan borrowers, and payments are made based on your family size and household income. The amount you pay is between 10 and 20 percent of your discretionary income. Your remaining balance after 20 or 25 years of payments – depending on the IDR plan – will be canceled.
If you apply for PSLF, you still need to place your loans in an IDR plan. If something happens to your file in the PSLF, e.g. if you stop working for an eligible employer, you can still get credit forgiveness, but it may not happen as quickly as PSLF.
While refinancing your student loans won’t put you on the path to forgiveness, it could lower your monthly payments or interest rates, or allow you to pay off your loan sooner.
With refinance, you take out a new loan to replace your old loans and then make a monthly payment on your new loan. If you have excellent credit, you may qualify for the lowest interest rate offered by private lenders. But it is important to note that if your interest rate isn’t lower than what you are currently paying on federal student loans, it might not be a smart idea to refinance your loans if you have to wind up paying more in the long run.
Refinancing your loans also means you lose the protection and options you would get with federal loans since your new debt will be a private student loan. For example, not all private lenders offer forbearance and deferment. So if you can’t pay or need to stop payments with no penalty, you may not have an option with some private lenders. Because refinancing comes with these types of risks, only refinance when it suits your financial situation.