Do you owe on federal student loans? Did you know that, under certain circumstances, the U.S. government will forgive (or “cancel” or “discharge”) all or part of it? You need to know about these if you are or soon will be on the job market!
Public Service Loan Forgiveness (PSLF): Ten years ago Congress realized many baby boomers who performed public service will soon retire, requiring lots of well-educated young workers to replace them. So now PSLF will forgive any Federal Direct Loan Program (FDLP) debt you owe after you (1) work full-time for 10 years for federal, state, or local government, or for a 501(c)(3) nonprofit, and (2) make on-time monthly loan payments for all 10 of those years.
You’ll also need make to make your monthly payments under the government’s standard repayment plan or one of its income-driven repayment plans. The standard plan normally requires you to pay your debt in full within 10 years, eliminating your opportunity for forgiveness. But if you replace your current federal loans (including your Perkins Loans) with a Federal Direct Consolidation Loan of $7,500 or more, you’ll get a 12 to 30 year repayment period. This lowers your monthly payments and helps you qualify for the maximum amount of loan forgiveness once you hit the 10 year mark.
Teacher Loan Forgiveness: Congress also knows our nation has a tough time getting teachers to teach, and keep teaching, vitally important subjects, especially in our poorest schools. So under this program you’ll qualify for forgiveness of your FDLP and Federal Family Education Loan Program (FFELP) loans – although loans made to parents don’t qualify for Teacher Loan Forgiveness — once you hit five complete, consecutive years of full-time teaching in a Title I or low-income school as a highly-qualified teacher. Up to $17,500 of your debt may be forgiven if you teach math or science to high school students or special education children with disabilities. Teaching other elementary or secondary school subjects qualifies you for up to $5,000 of forgiveness.
Perkins Loan Teacher Loan Cancellation: This program — under which you can have up to 100% of your Federal Perkins Loan debt cancelled — began when the Soviet Union launched Sputnik in the 1950s, causing Congress to realize that we needed more teachers for national security purposes. It’s been amended a bit through the years. Now, to qualify for it, you must have served full-time in a public or nonprofit elementary or secondary school system while (1) teaching students from low-income families; or (2) providing special education services to infants, toddlers, children, or youth with disabilities; or (3) teaching math, science, foreign languages, bilingual education, or any other field in which your state education has a shortage of qualified teachers.
If you’re eligible, your Perkins debt will be canceled in the following increments:
– 15% each for your first and second years of teaching; and
– 20% each for your third and fourth years of teaching; and
– 30% for your fifth year of teaching.
Interest that accrued during each year gets cancelled, too, and you may defer repayment while performing teaching service that qualifies for cancellation. Contact the college or university that made your loan to you for information about deferment.
Other Perkins Loan Cancellation and Discharge: Washington also has programs to cancel your Federal Perkins Loan debt if you perform various types of service. These include but aren’t limited to serving as a nurse or medical technician, in law enforcement or corrections, in the U.S. armed forces in areas of hostilities, in ACTION or the Peace Corps, and in child or family services. The amount that may be canceled depends on what service you perform. Depending on when you took out your loan, you may be eligible to cancel part of or all of it.
The government also forgives federal student debt if you die or become totally and permanently disabled (not recommended). It also has a few other, highly specialized and little used discharge programs for students whose colleges misbehaved. Follow the links embedded above for more information on all types of federal student loan forgiveness.
College Affordability Solutions has decades of experience with the federal student loan forgiveness programs. Need help understanding them? Call (512) 477-5354 or email www.collegeafford.com to find out how we can help you.