Teacher Loan Forgiveness: What You Should Know

Teacher loan forgiveness programs let eligible teachers have some or all their remaining student loan balances forgiven. Their eligibility criteria vary, so teachers need to ensure they're on the right path to qualify for forgiveness.

Here's a closer look at the various student loan forgiveness options for teachers.

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school teacher standing in front of students and holding tablet -- public employee 403b — Image source: Getty Images.

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You also need to repay your loans under an income-driven repayment plan to receive the most value from this student loan forgiveness program.

The PSLF program will forgive a borrower's remaining balance on their federal Direct Loans after they make 120 qualifying payments.

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Direct Loans

Direct Loans are federal student loans made directly by the U.S. Department of Education to students or parents.

Teacher Loan Forgiveness (TLF)

The Teacher Loan Forgiveness (TLF) program will forgive as much as $17,500 of a teacher's Direct Loans or Federal Stafford Loans (subsidized or unsubsidized). This program has two qualifications:

You must have been employed as a full-time teacher at an eligible school for five complete and consecutive school years.
At least one of those academic years must have been after the 1997–98 school year.

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Subsidized Student Loans

A subsidized student loan is a type of federal student loan that is designed to help borrowers with demonstrated financial need pay for college.

Unsubsidized Student Loans

Unsubsidized student loans are a form of student loan where the borrower is responsible for paying all interest that accumulates, even when in school or on a deferment.

The TLF program will forgive as much as $17,500 in student loan debt for certain highly qualified special education, secondary math, or science teachers. All other eligible teachers can receive as much as $5,000 in student loan forgiveness.

Parent PLUS Loans and Perkins Loans aren't eligible for this student loan forgiveness program. Also, time spent teaching through AmeriCorps doesn't count toward a teacher's eligibility for this program.

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Perkins Loan Cancellation for Teachers

Teachers with Perkins Loans can potentially receive forgiveness under Perkins Loan Cancellation for Teachers. This program will forgive as much as 100% of a teacher's federal Perkins Loans if they teach full-time at a low-income school or if they teach specific subjects.

Eligible teachers will receive the following forgiveness in increments:

15% of their Perkins Loan balance canceled per year for the first two years of their teaching service.
20% canceled annually for the third and fourth years of service.
30% canceled for the fifth year of service.

Amounts canceled include any interest accrued during the year.

Teachers should check to see if their school qualifies as low-income. If it doesn't, teachers may still qualify for Perkins Loan Cancellation if they teach math, science, foreign languages, or bilingual or special education. In addition, people teaching different subjects in some states can receive cancellation under this program if the state education agency determines there is a shortage of qualified teachers.

Teachers in private schools can also receive cancellation under this program if their school has nonprofit status or provides elementary or secondary education according to state law.

State-sponsored student loan forgiveness programs

Many states have programs for forgiving student loans for teachers. Most of these programs are specifically for those who teach in an area with high need to incentivize teachers to work in those districts. Teachers interested in whether their state offers a forgiveness program should contact their state's education agency for more information.

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Public Service Loan Forgiveness

Public Student Loan Forgiveness (PSLF) allows public servants to have their student loans discharged after 10 years of payments.

Student Loan Penalties: A Complete Guide

While there are no penalties for paying student loans early, borrowers can be charged fees for not paying student loans on time.

What to Know Before Taking a 403(b) Loan

You can borrow from this retirement plan, but is it a good idea?

403(b) Retirement Plans for Teachers & Non-Profit Employees

Here's a brief overview of 403(b) retirement plans, including their pros, cons, and contribution limits.

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About the Author

Matt DiLallo has been a contributing Motley Fool stock market analyst specializing in covering dividend-paying companies, particularly in the energy and REIT sectors, since 2012. He also covers pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

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