Debt Relief for Teachers

Debt relief help for teachers: student loan forgiveness, grants, credit counseling, consolidation programs and tips for surviving on a teacher’s salary.

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If you can read this, the saying goes, thank a teacher.

In fact, thank them twice if they’ve remained committed to the job of educating our kids while juggling student debt, salary deficiencies and the all-too-common practice of personally buying classroom supplies.

There are financial assistance programs available to teachers, and for good reason.  Teachers do great and important work and often the obstacles confronted along the way are daunting.

The programs to help teachers are a godsend in some cases and, unfortunately, still not enough to meet their needs in many others.

What’s clear is that the programs we will discuss shortly stem from recognition of the importance of teachers. They also stem from sobering realities about teacher salaries in America and statistics regarding student debt that do not require a proficiency in math to understand.

The National Education Association estimates 42% of teachers with more than a decade of experience, still have student debt. The %age among all teachers is 70%, affecting their ability to save and to pay off credit cards and other debt.

Paying off debt would be much easier, of course, if salaries in the profession didn’t severely lag when compared to so many other careers.

The average starting teacher salary in the United States from 2019-20 was $41,136, according to the NEA. That’s an increase but the association warns the available data pre-dated sales and income tax revenues crashing due to the pandemic.

NEA research showed 6,100 school districts nationwide with a starting teacher salary of less than $40,000. No wonder financial assistance for teachers and debt relief for teachers is such a crying need. A starting teacher coming out of a four-year college is only beginning his or her educational journey, and that journey is expensive every step of the way.

Getting on the salary track often necessary to make ends meet requires at least a master’s degree. According to the National Center for Education Statistics, student debt grows to an average of $66,000 for many of those completing master’s degrees.

It’s obvious why many teachers feel the need to work second jobs during summer breaks. (Or that teachers react strongly to the suggestion that having “summers off” is a kind of perk you can’t put a price on.)

The most recent statistics from the NEA show that in addition to writing curriculum, attending workshops and other school-related responsibilities, almost 16 % of teachers have non-school jobs over the summer to help pay down student debt and credit card debt.

After a downturn in household credit card debt brought on by Covid-19 assistance programs, credit card debt is once again on the march in America. It grew by $45.7 billion in the second quarter of 2021. With teachers getting squeezed more than some other professions — teacher compensation shrunk 4.5% over the last decade — managing credit card debt for many is among their biggest headaches.

Teaching is often called a vocation. While there’s clearly satisfaction in making an enduring difference in young lives, that doesn’t pay the bills. Fortunately, there are programs that can help.

Public Service Student Loan Forgiveness Programs

An assortment of programs exist for teachers to defray, or completely forgive, federal student loan debt. The primary ones are Teacher Loan Forgiveness and Public Service Loan Forgiveness.

Again, these programs are for federal loans; if you need relief from a private loan, you must work that out with the lender.

Let’s have a look at each.

Teacher Loan Forgiveness

These plans can relieve up to $17,500 in debt. To qualify, candidates must teach full-time for five consecutive years at a qualifying low-income elementary or secondary school.

Federal Direct and Stafford loans are eligible for student loan forgiveness under this program, which, upon examination, reveals itself as a two-edged sword. On one side, with its $17,500 limit, the Teacher Loan Forgiveness plan is not exceptionally generous, particularly as compared to the Public Service Loan Forgiveness program. On the other, Teacher Loan Forgiveness eliminates student debt twice as fast — five years, compared to 10 via the Public Service Loan program.

The Teacher Loan Forgiveness plan also treats teachers differently, depending on their discipline. Top-dollar forgiveness goes to secondary school math, science, and special education teachers. Debt forgiveness tops out at $5,000 for elementary school teachers and secondary school teachers who teach other subjects.

Teachers who have completed five years at qualifying schools submit a Teacher Loan Forgiveness Application to their loan servicer. An approved school official must fill out one section of the form. Teachers who served at more than one qualifying school must have a representative from each school complete that section.

These plans naturally carry some eligibility requirements:

  • Full-time employment as a “highly qualified teacher” for five complete and consecutive academic years. Make sure one of those years is after the 1997-98 school year.
  • You can’t have had an outstanding balance on Direct Loans or Federal Family Education Loan (FFEL) Program loans as of Oct. 1, 1998.
  • Employment at an elementary school, secondary school, or educational service agency that serves low-income students is required.
  • The loan for which you are seeking forgiveness should pre-date the end of your five academic years of qualifying service.

Public Service Loan Forgiveness

These plans are for those who work for any level of government or a qualifying nonprofit, including public schools or private nonprofit schools.

This is not just for teachers, but teachers are eligible. Work in one, or a combination, of the qualified fields for 10 years, make 120 on-time payments and the balance of your federal direct loan is canceled. The payments don’t even have to be consecutive. The program applies if you have enjoyed deferments or forbearance.

Though it’s not quite as easy as saying, “Voila,” it’s an attractive program — some people organize their early careers around qualifying — but you should make sure your ducks are in a row. Indeed, the feds urge candidates to complete and submit the Employment Certification form as soon as possible. Don’t get years into your work life planning to take advantage of PSLF only to discover you’ve been on the wrong path or haven’t been following the program.

This is not idle speculation. Begun in 2007, the Department of Education began ruling on applicants in 2017 and the news is not comforting.

In what sounds like a needle in a haystack story, only 2.1% of processed applications have met approval since the program’s inception. While claim approvals were up 32.4 % from March to November 2020, the rejection rate was four times that.

So we’re saying there’s a chance for teachers, but just know that according to the October 2021 numbers reported by the National Education Initiative, 73% of approved applications come from government workers. Word to the wise: Be diligent. Too few payments account for 59% of denials while 26% of denials are due to missing information.

As always, not everyone qualifies. If the PSLF program seems as competitive as the Hunger Games, it’s not far off. Generally, those who do qualify:

  • work for a government agency or for a qualifying nonprofit
  • work full-time for the agency or nonprofit
  • have Direct Loans (or consolidate other federal student loans)
  • repay their loans on an income-based plan
  • make 120 qualifying payments.

When these and more specific requirements are fulfilled, the balance of the student-loan debt can be forgiven. Better still, PSLF can be combined with the Teacher Loan Forgiveness Program — first one, then the other.

Perkins Loan Cancellation for Teachers

  • You could (eventually) get 100% of your Perkins Loan Program  forgiven  provided: You work at a low-income school. To see if the school qualifies as low income, check out Student Aid’s online school database. for the years you’ve been employed as a teacher.
  • Even if the school doesn’t qualify you, it’s possible the subject taught will. Such as mathematics, science, foreign language, bilingual or special education — or a subject short on qualified teachers in your particular state.
  • Forgiveness might also apply to private school teachers if their school has established nonprofit status. The school must provide elementary or secondary education in accordance with state law.
  • You took out a qualifying  Federal Perkins Loan before September 30, 2017. Perkins loans taken out after September 30, 2017, when the program lapsed, are not eligible for cancellation.

The Perkins loan is forgiven in increments. The way it works: 15% per year in the first and second year; 20% in the third and fourth year; 30% in the fifth year. The amount forgiven includes interest accrued during that year.

State-sponsored Student Loan Forgiveness Programs

Some state and local governments have implemented student loan forgiveness programs for teachers who work in high-need areas. In that pursuit, the American Federation of Teachers’ searchable student loan forgiveness database is a teacher’s best friend.

TEACH Grant for College

TEACH stands for Teacher Education Assistance for College and Higher Education. It may answer the needs of aspiring teachers trying to avoid having to repay a student loan once they’re out in the workforce.

It’s different from other grants in that it requires you to complete a teaching service agreement as a precursor to receiving the grant, which can top off at $4,000 per year for undergrad and grad students. Failure to meet the service obligation converts the TEACH grant to a loan that you must repay, interest included.

What is the TEACH Grant service obligation? You agree to spend four years teaching a high-need field in a low-income district after graduation. Teachers have eight years to complete the obligation. Failure to do so converts the grant into a loan.

 Eligibility requirements:

  • You must meet the basic criteria for federal student loan programs.
  • Enrollment at a school that participates in the program.
  • Be in a qualifying teacher education program.
  • Meet certain academic achievement requirements such as scoring above the 75th %ile on a portion of the college admission test or carrying a 3.25 GPA.
  • Receive TEACH grant counseling on a yearly basis.
  • Most importantly, you must sign a TEACH Grant service agreement.

In July, the Biden administration announced changes to the program in response to charges of mismanagement. The changes benefit teachers who may have failed to correctly complete annual certification paperwork, and it stipulates that the conversion from grant to repayable loan take place only after a teacher’s eight-year grace period expires.

Income-Driven Repayment Plans

Teachers can get debt relief through income-based repayment plans by applying to pay a lower monthly payment on their student loans, the idea being to put the savings toward other debts.

Of course, a monthly decrease in payments could add up to more interest due if the repayment period on the loan is extended.

The program lowers your payment based on your income and family size. The new payment is calculated on a %age of your discretionary income and that %age can change based on the repayment plan in which you participate.

  • REPAYE (Revised Pay As You Earn). Generally, 10 % of your discretionary income for a period of 20 years (undergraduate) to 25 years (post graduate).
  • PAYE (Pay As You Earn). Open to new borrowers only. Also 10 % of your discretionary income for 20 years.
  • IBR (Income Based Repayment) For new borrowers (on or before July 1, 2014) for a period of 20 years it’s 10 % of your discretionary income but never more than the 10-year Standard Repayment Plan. For other borrowers it’s 15 % for a period of 25 years.
  • ICR (Income Contingent Repayment) Whatever is the lesser amount between 20 % of your discretionary income or what you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income.

The plans take into account fluctuation in income and increases in family size. In all plans, the remaining loan balances are forgiven if your federal student loans aren’t fully repaid at the end of the repayment period.

Consolidation Loans for Teachers with Bad Credit

As an educator, your professional association/union or teacher-specific credit union might have your back here. The National Education Association (NEA) touts its loan program that can cover a wide variety of expenses, from consolidating your holiday debt to covering home repairs, weddings, baby costs and more.

Check the fine print, however. Even though the NEA is on your side, the bank’s underwriters take a dim view of risky loans. Rates range from modest to knee-melting, depending on the applicant. But it’s nice to know there’s a place to start.

Even if you’ve suffered some credit dings, if you are tenured, lenders will look favorably on your application. They know you’re a good risk to have a steady, reliable income.

Bad credit and no tenure? You might find the rate on a signature loan — that is, a loan guaranteed by nothing but your promise to repay — is either difficult to close, or painful to pay.

Teachers with bad credit committed  to a personal loan should take the steps anyone else with troubled credit should do: Contact creditors about negotiating the removal of bad reports; pay down (or pay off) outstanding balances (that might involve taking a part-time job); and investigate zero-interest credit cards that offer cash advances (but study the zero-interest grace period).

If you have something valuable and tangible to stake out — home equity loans spring to mind — you might exercise the collateralized loan option. Your rate, even with rough credit, will be lower than on a personal loan, and you’ll have longer to repay. But, again, your house (or car, or jewelry — whatever you’ve collateralized) will be at risk until the loan is paid back.

Your absolute last-ditch option should be a payday loan, or cash advance. Because they get you on the fees — especially if you roll over your loan — such advances can get cripplingly expensive fast. Use one only in absolute emergencies, and only if you are cut off from all other areas of relief.

You are far better off giving nonprofit debt management program a try. Learn from professionals how you can consolidate your debts without a loan. And it helps to know that credit score is not a factor for enrolling in a debt management program.

Ways for Teachers to Make Extra Money in the Summer

Summertime for teachers is not what some non-teachers like to imagine: pool rafts, Jimmy Buffett songs and banana daiquiris.

It’s hardly a three-month vacation. If teachers are fortunate enough to pad their income by teaching a summer session in their districts, that work is often in addition to their curriculum planning and other academic obligations.

If they’re not fortunate enough to make some extra money in their full-time profession, it’s good to know there are other options. None will make anybody rich but can help pay down student loan and credit card debt for many teachers.

The opportunities for teachers these days stretch beyond the following list, given how many businesses are hanging “Help Wanted” signs and might settle for finding short-term solutions.

Unlike some lists that mention blogs (not sure where the startup money is in that), here’s a short list of more reasonable possibilities and more immediate income opportunities:

  • Summer camps. Where there are kids, there is a need for adults who can supervise and relate to them. Camps are always interested in experienced teachers. You might find one that specializes in your particular area of interest, the arts, for instance.
  • Seasonal work. You don’t have to live in a high tourist area to find businesses whose earning power spikes in the summer months. Amusement parks, landscaping, etc. Maybe it’s not exactly up your alley, but then again maybe a change of pace would be refreshing.
  • And if you’re not necessarily looking for a change of pace, summer is a time for students to catch up and prepare for the next school year if they’re struggling with a particular subject. Some tutoring can be done at your convenience, online. One place to start: Varsity Tutors, which links students and tutors in specialized areas that fit the needs of the former to the skills of the latter. Tutoring isn’t only a job option for summertime but just might bring additional income year round.
  • Child care work. Think of it as the indoor summer camp with a different age group and, certainly, different responsibilities. It can still be as equally fulfilling as teaching in the right circumstances. Often the need for temporary help increases in the summer when kids are out of school.
  • House/dog sitter/dog walker: OK, so maybe this is part of my personal agenda to find qualified and willing adults to make it easier for couples and families to leave home for a few days or to go on an extended vacation and not worry about the house or worry about putting the dog in a kennel. (My wife would sooner put me in a kennel than put our dog in one.) But I can tell you from experience there’s a need, especially in the vacation season, and the price for doing these jobs is going up.
  • So many restaurants are looking for workers they can count on these days. While it may not strike you as the most glamorous way to spend a summer, the pay is getting better (out of employer desperation) and some restaurants might even offer small signing bonuses. Reliability? Check. People skills? Check. Teachers have them both in ample supply.

Cost Breaks for School Supplies

If you know a teacher, you have probably heard talk about dipping into his or her own pocket to pay for sorely needed school supplies. This doesn’t happen everywhere but in some school districts it’s become more the rule than the exception.

Thankfully, there were discounts available for teachers to help them save money in 2021:

  • Staples offered 20% back and free shipping through its Teacher Rewards program on the Staples Connect app.
  • The New York Times offered a 50% discount on subscription fees for K-12 teachers.
  • Barnes & Noble offered teachers a 20% discount on hardback books and a 15% break for paperbacks.
  • Office Depot offered a number of discounts for everything from spiral notebooks to post-it notes.
  • Ditto OfficeMax.
  • The Container Store offered a 15% discount to help teachers get their classrooms organized.
  • Dollar General offered a whopping 30 % off school supplies this summer in a promotion that ended Sept. 6.

Many other businesses offer both online and instore discounts available to teachers.

Get Help with Your Debt from Financial Professionals

Discount school supplies no doubt can help a teacher committed to making sure students have the tools for learning. But it is money out of the pockets of teachers, who may still be short on salary and long on student debt or credit card debt.

Free nonprofit credit counseling can provide teachers with the professional direction and support necessary to manage their finances and get out from under debt.

Credit counselors have done their homework, too, and are prepared to evaluate your debt with you and explore the different debt-relief options available.

They can help teachers choose the best strategies to paying off debt and perhaps help more teachers remain in a challenging and vital profession where they are so sorely needed.

About The Author

George Morris

In his 40-plus-year newspaper career, George Morris has written about just about everything -- Super Bowls, evangelists, World War II veterans and ordinary people with extraordinary tales. His work has received multiple honors from the Society of Professional Journalists, the Louisiana-Mississippi Associated Press and the Louisiana Press Association. He avoids debt when he can and pays it off quickly when he can't, and he's only too happy to suggest how you might do the same.


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