What is Teacher Loan Forgiveness? Is it Worth it?

Photo: My classroom this year.  School starts Monday, August 24th.

Teacher loan forgiveness is a program that has been implemented by the Federal Government that forgives either $5,000 or $17,500, depending on the subject that you teach.  Since I taught math, my forgiveness was $17,500.  This is only one of the requirements of this program and I will detail how you can utilize this program as a way to get some of your student loans forgiven.  

One of the reasons that I moved to Texas was the higher pay, but another reason was that there was this option to get my student loans forgiven.  One of the requirements of the teacher loan forgiveness is that you have to work in an underserved area.  An underserved area is defined as low-income school district.  This program was created to help the low-income areas get teachers.  These districts were having a hard time finding teachers, because the low-income schools have a bad rap as being difficult schools to teach in.  This can be true in some instances, because of less parent involvement and more single-parent families.  My experience at a low income school has been pretty good.   Most of the students are respectful and I am even starting my sixth year of teaching at the same school.  There will always be those difficult students, but with expectations, all students can be managed.  I honestly believe that I have grown a lot as a teacher from my school and I am glad that I got this experience. If you are interested in teacher loan forgiveness and want to see if your school is a low-income school, then you can click on this link.

What are the requirements of this program?

Five consecutive years of teaching in a low-income school - I think it is funny that they require the years to be consecutive.  I have a friend who taught two years in a low-income district and then moved to a high income district for two years and then moved back to the original low-income district for three more years.  He was not able to receive the teacher loan forgiveness, because he taught five years, but they were not consecutive.

What will be forgiven?

There are two possible amounts of money to be forgiven by the government.  The amounts are either $5,000 or $17,500.  The difference in forgiveness is based on teacher need.  The subjects that have a higher need for teachers receive more in the forgiveness.

Subjects that get $5,000 forgiven:

  • Full-Time Highly-Qualified Elementary Teachers
  • Full-Time Highly Qualified Secondary Art, Band, English, Social Studies, PE or any other subjects not listed in the listed below

Subjects that get $17,500 forgiven:

  • Full-Time Highly Qualified Secondary Math or Science Teachers
  • Full-Time Highly Qualified Special Education Teachers who serve the special education students

What is Highly Qualified?

Highly qualified is simply a term used to describe that a teacher is certified to teach by passing a test proving their knowledge of the subject matter.  In Texas, you are required to pass these tests to be a certified teacher, therefore anyone who is certified is considered highly qualified.

How do you Apply?

The application form can be found by clicking on this link.  I used this form to apply.  I filled out the areas that I could fill out and then I sent it to the district office.  At the district office, they listed my years of service and signed the document.  The document was then sent back to me and I then mailed it to my loan provider.  I mailed the form to NelNet (company who held my loan) in May.  I received a letter back at the beginning of June stating that they were reviewing my application.  Two weeks later, I received a letter notifying me that they had reviewed the application.  They found it to be valid and forwarded the application to the department of education.  Six weeks later, I found out that the department of education had forgiven my student loans.  This process took longer than I expected, but it took about two months for the whole process to be completed.

Was it Worth it?

I keep asking myself was it worth it waiting the five years to get the loans forgiven?  If you are talking five years, you have to calculate the cost of interest on those loans to be able to make a smart decision.  This situation was a little different, because I had paid off all of my debts only a year and a half before my application was due.  Looking at it from that perspective, it was totally worth it, because I was in Grad school at the time and they defer your loans.  So, I wasn’t required to pay anything and most of the loans were not accruing interest.

I learned that while you are in school, they don’t charge you interest on your loans from undergrad, but interest is being charged on loans from graduate school.  As stated in an earlier article, from January to August my accounts only accrued $250 in interest.  Therefore, based on this iformation we could assume that my loans accrued $750 in interest from the time that I paid off all debts, except for the student loans.  In this situation, it was worth paying $750 to get $17,500 forgiven.

This will not always be the case and the amount of time left until it is forgiven does affect how you should go about this process.  It is definitely not worth it to wait five years for $5,000, especially if you pay off all of your loans in one or two years.  There are multiple things that need to be calculated to make sure that this strategy is right for you.  These are:

  • Interest accrued from time all other debts are paid off until the loan is forgiven
  • Taxes – Teacher loan forgiveness is considered income and is taxed at your income level.  So, I have to make sure that I have 28% of $17,500 sitting in an account to pay for the taxes on this income.  
  • Years left on the forgiveness.

I personally believe that this program can be good for students that have lots of student debt.  If you graduate college with $50,000 or $75,000 in debt and still have a balance 5 years into to teaching, then this program can help.  But make sure that this is a smart financial decision.

There are lots of programs out there to try to help college students pay off portions of their debt.  It is important to run the numbers and make sure that a plan is good for you financially.  Not all plans are good.  Most of the time it is not good to stay in debt for five years, just to get a little bit of money from the government. Are there any other teachers who have utilized this program?  Was it worth it in your mind?  Let me know here.

Most of the information in this article came from the student aid website.  If you are more interested in utilizing teacher loan forgiveness, then you can click on this link.