As promised, more on student loan forgiveness and cancellation programs.
Teacher Loan Forgiveness Program
This program is for
students who have received a Stafford loan or Direct loan. Up to $5,000 of loan may be forgiven if you did
not have an outstanding loan balance as of October 1, 1998 and you meet the
program qualifications. An increase of up to $17,500 loan forgiveness may be
available if you are teaching in certain areas and did not have an outstanding
loan balance as of October 1, 1998, or on the date that you obtained a Stafford
or Direct loan after October 1, 1998.
Minimum qualifications require you to teach full-time for at
least five consecutive academic years in an elementary or secondary school (must
be public or private nonprofit) that has been designated as a “low-income”
school by the Department of Education.
In addition:
- At least one of the five qualifying years of
teaching must have occurred after the 1997-98 academic year.
- The loan must have been made before the end of
the fifth year of qualifying teaching.
- A defaulted loan does not qualify for
forgiveness unless you have made satisfactory repayment arrangements with the
holder of the loan.
The maximum $17,500 forgiveness is for certain teachers in mathematics, science, and social education.
Each year, the Department of Education publishes a list of
low-income elementary and secondary schools.
You can still qualify for the forgiveness program even if your school is
not considered a “low-income” school for five consecutive years. The time would
begin from the first academic year the school was established as “low-income”
and continue for five years even if not “low-income” in subsequent years.
There are different qualifications depending on when your
teaching service began. The cut-off date
is October 30, 2004. Also, there is additional information on the Federal
Student Aid website regarding the application process, interruptions in
teaching service, and postponing repayment.
Public Service Loan Forgiveness
For Direct loan holders only (Stafford borrowers do not
qualify unless they consolidate loans into the Direct Lending program beginning
July 1, 2008).
The remaining interest and principal balance of Direct loans
are forgiven if the student has made 120 monthly payments on or after October
1, 2007, and have completed employment in a public service area for each of
those 120 months (10 years).
Examples of public service jobs include government, military,
public safety & law enforcement, public health, public education, social
work in public child or family service agency, public librarians, school
librarians, among others. The Department of Education determines the standards
for public service.
If you think you may qualify for the Public Service Loan
Forgiveness Program, please refer to FinAid for more
information.
Cancellation for Child Care Providers
This is a new demonstration program for Stafford loan
borrowers who did not borrow a Stafford loan prior to October 7, 1998, or who
no long had an outstanding loan balance on October 7, 1998 or when they took
out a new Stafford loan after that date.
This program is awarded on a first-come, first-served basis
for applicants who:
- have been employed full-time as a child care
provider for two consecutive years prior to applying for the cancellation.
- work in a child-care facility in a low-income community
before the year in which you are applying.
- have completed an associate’s or bachelor’s
degree in early childhood education.
- have not received AmeriCorps benefits for the
same child care service.
The cancellation is a graduated percentage each time you
complete the specified years of service.
The Department of Education is in charge of
the application. However, no
new applications are being accepted at this time,
and no new funding has been authorized for the program.
Renewal benefit applications are still
available for those who have already received the cancellation through this
program.