Home ::

Teachers who have received certain federal loans to attend school and now serve in a designated low-income school or in a designated subject-matter shortage area may have the opportunity for partial loan forgiveness, deferment or cancellation of student loans, depending on the type of loan, date of the teacher’s first loan and length of teaching service.

Each year, the Texas Education Agency produces a list of designated low-income schools (those with greater than 30 percent of enrolled students from low-income families in districts eligible for Title I funds).

TEA's list of designated subject-matter teacher shortage areas for the 2008-09 school year are:

  • special education
  • mathematics
  • Science
  • Foreign language (languages other than English)
  • Bilingual/ESL
  • Technology applications

A teacher may request forgiveness on a Stafford loan if:
• The teacher received his/her first loan on or after Oct. 1, 1998; and
• The teacher had no outstanding balance remaining on any Federal Family Education Loan Program (FFELP) or Direct Loan Program at the time the first loan was made; and
• The teacher has been employed five consecutive years in a designated low-income school.

Qualifying teachers may be eligible to receive a total forgiveness benefit of up to $5,000 ($17,500 for secondary math and science teachers and special education teachers at either the elementary or secondary level, who took out their first Stafford loan on or after Oct. 1, 1998). Additional information is available on the U.S. Department of Education Web site.

Teachers who took out their first federal Stafford or Direct Loan between July 1, 1993 and Sept. 30, 1998, have NO forgiveness or deferment benefits since Congress did not legislate the Stafford or Direct Loan forgiveness programs to include benefits for loans received prior to Oct. 1, 1998. Congress has authorized a new loan forgiveness program for certain teachers in the reauthorized Higher Education Act, which has yet to be signed by the president. See related story.

Two new federal loan grant and forgiveness programs are available for teachers under the College Cost Reduction and Access Act of 2007, which amended the Higher Education Act.

One of the programs is a public service loan forgiveness program (Title IV, Page 17) which discharges any remaining debt after 10 years of full-time employment in public service, including jobs in public education. The borrower must have made 120 payments as part of the Federal Direct Loan program in order to obtain this benefit. Only payments made on or after October 1, 2007 count toward the required 120 monthly payments. (Borrowers may consolidate into Direct Lending in order to qualify for this loan forgiveness program starting July 1, 2008.)

The borrower must be employed full-time in a public service job for each of the 120 monthly payments. Although Perkins Loans are not eligible for public service loan forgiveness, if they are included in a Federal Direct Consolidation Loan the entire consolidation loan, including the Perkins Loans, is eligible for public service loan forgiveness. One may use income-based repayment and income-contingent repayment on such a consolidation loan. (Perkins loan borrowers will need to consider the tradeoffs of including the Perkins loans in a federal direct consolidation loan. When Perkins loans are consolidated, they lose several favorable benefits, such as subsidized interest, a 9 month grace period, and a generous loan forgiveness program). More information is available here.

The other program is the Teacher Education Assistance for College and Higher Education (TEACH) Grant program (Title I, Sec. 104, page 3): which, beginning July 1, 2008, provides up to $4,000 a year in grant aid to undergraduate and graduate students and students enrolled in a post-baccalaureate teacher credential program, or current or prospective teachers applying for master’s degrees.

Eligible undergraduate and post-baccalaureate students may not receive more than $16,000 and graduate students may receive no more than $8,000 in total TEACH Grants. Current or prospective teachers applying for a grant to obtain a graduate degree must either be: a teacher or a retiree from another occupation with expertise in a field in which there is a shortage of teachers, such as mathematics, science, special education, English language acquisition, or another high-need subject; or must be or was a teacher who is using high-quality alternative certification routes, such as Teach for America, to get certified. To receive a TEACH Grant students must also agree to:

(A) serve as a full-time teacher for a total of not less than 4 academic years within 8 years after completing the course of study for which the applicant received a TEACH Grant under this subpart;

(B) teach in a high-need school;

(C) teach in any of the following fields—

(i) mathematics;

(ii) science;

(iii) a foreign language;

(iv) bilingual education;

(v) special education;

(vi) as a reading specialist; or

(vii) another field documented as high-need by the Federal Government, State government, or local educational agency, and approved by the Secretary;

(D) submit evidence of such employment in the form of a certification by the chief administrative officer of the school upon completion of each year of such service; and

(E) comply with the requirements for being a highly qualified teacher as defined by the federal No Child Left Behind Act.

Information regarding student loan forgiveness for teachers can be found on the TEA website.

Reviewed: 09/30/08