Managing Debt on a Teacher’s Salary Is Possible: Here's How To Get Debt Relief

Federal loan forgiveness options can provide relief — no matter how much you owe.
Last updated Sep 11, 2020 | By Jennifer Calonia
teacher stressed over debt

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Going into a career as an educator is undeniably rewarding. You get the opportunity to directly inspire and encourage the young, bright minds of the future.

But recent salary data paints a less rosy picture. In fact, according to the National Education Association, the average starting teacher salary from 2017-18 was $39,249. When compared to the average national salary at $75,339, it’s clear there’s a salary gap for teachers nationwide.

This salary gap is up against the reality that teachers are among the general graduating population that carries an average student loan debt of $22,600, according to recent data from Experian. What’s more, teachers are encouraged to pursue a master’s or doctoral degree to be eligible for “lane increase” salary bumps, taking their total average student loan burden to $66,000 for a master’s degree, according to the National Center for Education Statistics.

Fortunately, there are a few federal programs offering relief for teachers wondering how to pay off debt. Here’s a breakdown of the key student loan forgiveness programs that can help.

Teacher Loan Forgiveness Program

Under the Teacher Loan Forgiveness Program, you can have up to $17,500 in student loan debt forgiven, depending on the subject matter you teach.

What you should know

Secondary school math and science teachers, as well as special education teachers, can receive $17,500 in student loan forgiveness. Elementary and secondary teachers, qualifying for Teacher Loan Forgiveness in other subject matters, are eligible for a $5,000 award. Regardless of the amount you have forgiven under this program, it doesn’t count as taxable income.

Additional qualifications include:

  • Being a highly qualified teacher
  • Working full time
  • Completing five consecutive and complete academic years
  • Teaching at a low-income school or educational service agency

To be a “highly qualified teacher,” you must earn a bachelor’s degree at minimum, be state-certified as a teacher, and never have had your certification or license waived.

New elementary school teachers are also required to pass a state exam demonstrating basic curriculum knowledge in various areas, like reading, writing, and math.

The U.S. Department of Education updates the list of schools that meet this program’s qualifications annually. The Low-Income School Directory can help you find out if your institution qualifies as a low-income school.

Who it’s best for

Teachers who have a modest amount of student loan debt. “If you have less than $20,000 in student loans, Teacher Loan Forgiveness could make sense,” says Travis Hornsby, student loan expert and founder of Student Loan Planner.

This is largely because Public Service Loan Forgiveness (PSLF) provides a greater forgiveness benefit with fewer restrictions.

How to get it

After completing the required five full-time academic years of service, you can submit an application for Teacher Loan Forgiveness. The chief administrative officer of your school or agency must complete the certification section of the form.

Public Service Loan Forgiveness

Public Service Loan Forgiveness provides significant debt relief for teachers who qualify. After making 120 qualifying payments under an income-driven repayment (IDR) plan, the remainder of your student loan balance can be forgiven, tax-free.

What you should know

PSLF is one of the broadest student loan forgiveness options for teachers since it doesn’t require specific subject matter areas to qualify. However, there are important eligibility requirements that must be met in order to successfully have student loans forgiven:

  • Work full time at a government agency or nonprofit organization
  • Have Direct Loans (not in default)
  • Enroll in an IDR plan
  • Have 120 qualifying monthly payments, made after Oct. 1, 2007

This program is only available for Direct Loans, but you have the option to consolidate other federal loans into a Direct Consolidation Loan. However, doing so resets your payment count. Only new payments made toward the Direct Consolidation Loan apply for the 120 qualifying monthly payments, so take time to consider if this makes sense for you.

On the plus side, the 120 qualifying monthly payments don’t need to be consecutive. This flexibility is useful if you decide to work for a non-qualifying employer for a brief period, as your previous qualifying payments still count.

It’s also important to enroll in one of the four IDR plans, which include Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE).

Technically, the 10-year Standard Repayment Plan is also considered a qualifying plan, but this plan doesn’t allow you to take advantage of PSLF benefits. This is because PSLF requires 120 payments, and by the end of the 10 years, you’ll have no student loan balance left to forgive.

Who it’s best for

Teachers comfortable working in the public sector, especially those who have a high amount of student loan debt, since PSLF forgives 100% of student loans after the first qualifying 120 payments.

“If you owe more than $20,000 in debt, PSLF benefits make more sense to go after,” says Hornsby. “But keep in mind that you’ll have to go on income-driven repayment, which adds your spouse’s income to calculate your monthly student loan payment. If your spouse is a significantly high earner, your monthly student loan payment goes up, too.”

How to get it

First, talk to your loan servicer to get on an IDR plan. Since you’ll have to serve in the public sector for 10 years, it’s wise to keep track of payments by submitting an Employment Certification Form annually or if you change your employer.

Keep in mind, having your student loans forgiven isn’t automatic after making 120 qualifying payments — you still have to submit the PSLF Application for Forgiveness.

Perkins Loan Teacher Cancellation

You can have 100% of Federal Perkins student loan debt forgiven over five years of qualifying service.

What you should know

In addition to the service years required for full Perkins Loan Teacher Cancellation, teachers must work full time in a low-income school. You can also qualify if you teach special education, math, science, bilingual or foreign languages, or teach in a subject that your state determines has a shortage in the area.

Private school teachers may qualify if your school is considered a nonprofit elementary or secondary school.

Loans are cancelled in increments, based on the following schedule:

  • Years 1 and 2: 15% of Perkins Loans forgiven
  • Years 3 and 4: 20% of Perkins Loans forgiven
  • Year 5: 30% of Perkins Loans forgiven

Under Perkins Loan Teacher Cancellation, you don’t need to be certified or licensed, and your employer determines whether your position is considered full time and eligible for benefits.

Who it’s best for

Teachers with Federal Perkins Loans who also have less than $20,000 in student debt.

How to get it

To apply for student loan forgiveness through this program, go directly to the school who made the loan or the school’s Perkins Loan servicer to request the necessary forms and instructions.

Can you combine loan forgiveness programs?

It might seem advantageous to get out of debt by combining benefits from multiple programs. However, you’re likely not doing yourself any favors by doing so.

For example, the five-year commitment to qualify for Teacher Student Loan Forgiveness — including the payments you’ve made — aren’t counted toward the 10-year, 120 qualifying payment requirements for PSLF. Combining both programs will cost you a total 15 years of time. Plus, even the largest Teacher Student Loan Forgiveness award is inconsequential since you could qualify for 100% forgiveness on your remaining student loan debt after only 10 years through PSLF.

“You could combine Teacher Loan Forgiveness with Federal Perkins Loan Cancellation, if you have less than $20,000 in student loan debt and have Perkins Loans,” says Hornsby. “But this strategy only benefits a narrow slice of humans out there.”

While these forgiveness options are a lifesaver for long-term savings, you might need debt relief now.

Are consolidation loans for teachers with bad credit available?

Sometimes loan forgiveness isn’t the most viable option. If you have bad credit and are experiencing hardship from student loans that aren’t Direct Loans or Perkins Loans, you could consider a Direct Consolidation Loan.

Unlike private debt consolidation loans that require good credit to get approved and to qualify for competitive interest rates, a federal Direct Consolidation Loan doesn’t require a credit check. It can extend your repayment term up to 30 years and lower your monthly payment — but at a cost.

Extending your term increases your student loan debt overall. On top of the principal balanced owed, this type of consolidation adds your original loan’s interest into the new loan, which means you’ll accrue interest on interest.

There’s also the option of consolidating your federal loans to private loans, but there are risks as a teacher.

“You'd only refinance federal loans as a teacher if you were not planning on sticking around in the field,” says Hornsby. “If you plan on keeping a teaching career, you’ll lose PSLF and other federal protections by consolidating federal student loans into private loans.”

If making your monthly student loan payments is a struggle for you on a teacher’s salary, reach out to your loan servicer immediately to explore your options before making a final move.

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Author Details

Jennifer Calonia Jennifer Calonia is a native Los Angeles-based writer and editor with eight years of experience in personal finance. She's passionate about helping others pay off debt, navigate family finance, and use rewards credit cards, responsibly. She's been featured on Forbes, The Huffington Post, Business Insider, Credit Karma, Nerdwallet, and more. To find more information about her work, visit JenniferCalonia.com.