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Student Loan Forgiveness Programs for School Teachers: Understanding Stafford and Perkins Loans Deferred and Forgiven

Updated on March 19, 2013

Teacher Stafford and Perkins Loan Forgiveness

Teachers can have their student loans forgiven. If you are a teacher, you may have heard this, but not know if it was true or not. It is true. If you have a Federal Stafford loan, a Perkins loan, and you teach a qualified Title I school. Follow these steps and find out if you qualify. The Federal Stafford and Federal Perkins loans can both be forgiven if you teach for five years in designated schools.

Federal Perkins Forgiveness:
Step 1: Do you work a qualified Title I school? The Department of Education keeps a database on which schools qualify. Your school might not qualify now, but as long as it qualified when you started teaching there, it still counts toward your loan forgiveness.
Step 2: If your school is designated, STOP PAYING YOUR LOAN! Print out a forbearance form. This form is available from whoever administers your loan–e.g. whoever send you the bill each month. Fill the form out and have your principal add the pertinent information. Send this form instead of your next payment.
Step 3: At the end of the your teaching year, send in a cancellation form. The first and second years 15% of your loan are forgiven. 20% is forgiven the third and fourth years and the final 30% is forgiven the fifth year. This means that you can get partial forgiveness even if you do not complete 5 years at that school.

Stafford Forgiveness:
Step 1: Determine if you work at school designated for loan forgiveness. Follow this link to a database that shows all schools that meet the requirements of the Department of Education.
Step 2: Teach at that school for 5 years. [Note: The school does not have to be designated a low-income school for all five years, just the first of the five.]
Step 3: Print out this form, fill it out, and have your principal fill out the pertinent parts.

The Stafford Forgiveness is an all or nothing situation. If you teach four years and not five, you do not qualify, but if you teach all five you do qualify. Also, there are different forgiveness amounts based on the area you teach.

That's it. A little paperwork is worth thousands of dollars.

Title I

Title I refers to the statute that provides extra funding to some schools. This statute dates back to 1965, so the term Title I has become a part of general school parlance. It is a funding stream for school who serve under-performing students. This funding stream pays for the loan forgiveness. The Department of Ed reserves money for loan forgiveness because it helps recruit and retain teachers for these neediest schools.

Title I does not preclude private schools. Although rare, private schools can qualify for Title I funding.

Student Loan Forgiveness, Deferral, and Forbearance

There are a lot of terms to understand as you manage your student loan. This article deals mainly with forgiveness.

Forgiveness is when your loan is paid by another entity or your balance is reduced because of something you did–like work in a Title I school. This is the best possible program to take advantage of because you don't have to pay that portion of your loan, EVER.

Deferral means that the you do not have to pay your loan for a limited amount of time. Usually students who have loans will ask that their loans be deferred. During that time interest still accrues on the unsubsidized loans.

Forbearance means that you do not have to pay your loan for a limited amount of time. People sometimes file for forbearance during a time of financial hardship. The interest during that time still accrues and will be capitalized if you don't pay it. So, while forbearance can help in the short term, it will not help in the long run.

Obviously, the best of these options is forgiveness, but if making the monthly payments is too much check out consolidating your loans rather than forbearing them.


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