• Mitchell Reed Sussman

Teacher Loan Forgiveness

A full time teacher who has a Direct Federal Student Loan or Federal Family Education Loan (FFEL) and teaches full time for five full and consecutive academic years in a low income school or educational service can have their Federal Student Loan forgiven up to $5,000 to $17,500 depending on the subject area thought. Those who are highly qualified full time math or science teachers at a secondary school or highly qualified special education teacher at either elementary or secondary school who primarily provide such special education to children with disabilities in the teacher’s area of special education training qualify for up to $17,500 in forgiveness. Teachers which don’t teach in math, science, or special education, but are still highly qualified full time elementary or secondary education teachers, quality for up to $5,000 in forgiveness.


To be eligible, one must not have had an outstanding balance on a Direct Student Loan or Federal Family Education Loan as of the date you obtained your loan for the teaching education, must have been employed as a full time highly qualified teacher for five years continuously with at least one of those years being after 1998 at an elementary or secondary school, or educational service agency that serves low income students, and the loan for which forgiveness is sought being obtained before the end of the five years of qualifying teaching.


Under limited circumstances, less than a full academic year can be applicable for one of the required five years if at least half of the academic year was completed, the employer considers the incomplete year of service to have fulfilled the contractual requirements for the purposes of pay increases, tenure, and retirement, and either the reason for not completing the full academic year was due to retuning to postsecondary education on at least a half time basis in an area directly related to the teaching service, there was a condition covered under the Family and Medical Leave Act of 1993, or you were called or ordered to active duty for more than 30 days in the U.S. reserve armed forced.


In order to be considered a “highly qualified teacher”, one must earn at least a bachelor’s degree, have received full state certification as a teacher, and not received a waiver of certification or license requirements due to emergency, temporary, or provisional basis. In addition, there are further requirements for new teachers. For those going into teaching in an elementary school, one must pass a state test demonstrating subject matter knowledge and teaching skills in reading, writing, and math, along with other areas of basic elementary school curriculum.


For those going into teaching in a secondary school, a high level of competence must be shown in each subject one teaches by either passing a state academic subject test in each of these subjects one is to teach, or completing an undergraduate academic major or equivalent, an advanced certification or credential in each academic subject, or a graduate degree in the subject or subjects to teach.


If one is not new to teaching the highly qualified requirement can be met by either meeting the same requirements as for new teachers, or by demonstrating competence in all subjects one has taught in based on a high, objective, and uniform state evaluation standard. This standard must be set by the state for both subject matter knowledge and teaching skill, align with state academic content and student achievement standards developed with the consultation with specialists, teachers, principals, and school administrators, provide objective and coherent data about the teacher’s knowledge in the subject or subjects, apply uniformly to all teachers in the same subject and grade level, consider time teaching in the subject without being the primary basis, and be made available to the public on request.

To be considered serving low income students, the school or educational service must be listed in the annual Directory of Designated Low-Income Schools for Teacher Cancellation Benefits (Low-Income School Directory). This list is created and made available by the U.S. Department of Education and updated every year. If one starts teaching at a listed school, but during the five years of continuous teaching at that same school the school is no longer listed as a low income school, the teacher’s five years of continuous teaching at the school will still apply for the required five years to qualify for Teacher Loan Forgiveness. Of note, all elementary and secondary schools operated by the Bureau of Indian Education, or operated on Indian reservations by Indian tribal groups under contract with the Bureau of Indian Education, qualifies as schools serving low income students.


If an existing loan is in default, the borrower is not eligible for Teacher Loan Forgiveness unless there has been a repayment arraignment which satisfies the loan holder. One who is currently in default and wishes to apply for Teacher Loan Forgiveness must first make repayment arraignments with their loan holder in order to bring their loan out of default before applying for Teacher Loan Forgiveness even if all requirements are otherwise met.


The amount of the loan forgiven under Teacher Loan Forgiveness may be subject to taxes as income up to 25% of the $5,000 to $17,500 forgiven amount. This would be included in the tax year that forgiveness is received. This is something a borrower should bear in mind and plan for.


34 CFR §685.217


Federal Student Aid, U.S. Department of Education, In certain situations, you can have your federal student loan forgiven, canceled, or discharged (https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation)


Federal Student Aid, U.S. Department of Education, Wondering whether you can get your federal student loans forgiven for your service as a teacher? (https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/teacher)


Anderson, Tom, Student loan forgiveness can come with a tax bomb, CNBC, September 11, 2016 (https://www.cnbc.com/2016/09/09/student-loan-forgiveness-can-come-with-a-tax-bomb.html)

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