New Teacher Loan forgiveness....Check this out!
Financial Aid Incentives for Teachers
By Tamar Snyder
Just the thought of paying down more than $15,000 in student loans left Sonia Kunze feeling panicky. Before she was hired full-time, the 36-year-old teacher was a substitute at a local school in Iowa and was having a hard time coming up with the $150 monthly payment. She trolled the Internet looking for a solution and came across sites advertising loan forgiveness programs for teachers.
Unbeknownst to many current and aspiring teachers, Uncle Sam is prepared to foot some -- or all -- of your education bill as long as you're working in a high-priority subject area such as math, science, or special education, or willing to teach in a low-income school district.
"At first I didn't think I qualified because I didn't have a full-time job," Sonia said.
In August 2004, Sonia was hired full-time as an English Language Learner (ELL) teacher. But she still had a hard time coming up with that monthly payment. Desperation led her to call up the Iowa Student Loan hotline. A student loan specialist there determined that she qualified for $17,500 in loan forgiveness, since ELL is a shortage area. The woman talked her through the process and encouraged her to file for deferment on her loans until she finishes her five-year stint and officially qualified to have her student loans forgiven. She hasn't made a single payment since -- and probably never will.
"It was a complicated process, but man was it worth it," said Sonia, who is counting down the two-and-a-half years until she'll be debt free.
Unfortunately, Sonia can't reclaim the hard-earned money she had been mailing to the loan company each month before learning that she qualified for loan forgiveness.
"I wish the financial aid office at my college could have helped more," she said. "Every beginning teacher would know about this."
For her own part, Sonia is spreading the word. She posted flyers in the teachers' lounge highlighting loan forgiveness programs and has spread the word to colleagues. Even if you don't think you qualify, you owe it to yourself to make that call, she tells them. Many fellow teachers come back and thank her, saying they would never have guessed they qualified for loan forgiveness had she not encouraged them to check it out.
"People say teachers don't make any money," she said. "Well, this helps."
Since the program began, more than $106,841,868 -- about 18,742 teacher loans -- have been forgiven, according to United States Department of Education statistics.
"The social benefit is worth the cost of the program," said Sam Wilson, assistant vice president of customer assistance at Texas Guaranteed, the nation's fourth largest loan guarantor, which has eased the burden for 1,039 teachers by forgiving $6,490,000 in loans. "It's a fairly large incentive for teachers."
The Higher Education Reconciliation Act of 2005 (HERA), signed into law by President Bush in February 2006, removed deadlines for loan forgiveness available to highly qualified teachers in high-poverty districts. Now, full-time teachers working in elementary and secondary schools located in low-income communities may qualify for several federal loan forgiveness benefits indefinitely.
"Recruiting and retaining qualified professionals is key to ensuring the basic right of every child to attend a great public school," says National Education Association President Reg Weaver. "Discounts on gym memberships, housing incentives, bonuses, and loan forgiveness let teachers know that they, as well as their hard work and dedication, are valued." Over a five-year period, Perkins Loan borrowers can have their loans wiped out in full -- 15 percent for the first and second years of teaching, 20 percent for the third and fourth and 30 percent for the fifth.
Teachers in low-income school districts may also qualify for a $5,000 reduction on their Federal Stafford Loans. To qualify, they must have borrowed the money after Oct. 1, 1998, and taught for five consecutive years.
Low-income schools are defined by the Department of Education as schools where children from low-income households make up more than 30 percent of enrollment. To determine whether your school is designated as a "low-income school," contact your state education agency or visit the DOE's online database.
HERA also allows nonprofit private school teachers to qualify for loan forgiveness. Teachers must pass grade-level and subject-matter competency exams.
Teaching in a Shortage Area
If you're teaching full time in a subject area that has a shortage of teachers -- including math, science, and foreign languages -- you may be eligible for full cancellation of your Federal Perkins Loan. Check with your local school system or state education agency to find out if your subject area has a teacher shortage.
The Taxpayer-Teacher Protection Act passed in 2004 increased loan forgiveness by $12,500 to help ease shortages of teachers in certain subject areas. Now, elementary and secondary school teachers who first borrowed money after Oct. 1, 1998 (but before Oct. 1, 2005) may be eligible for up to $17,500 in Federal Stafford Loan forgiveness. To qualify, the teacher must be "highly qualified" under No Child Left Behind standards, and have worked as a full-time teacher for five consecutive years.
An increasingly high number of states offer state-specific loan forgiveness programs, according to the Lumina Foundation of Education, whose most recent count included 43 states with such programs. Mississippi teachers, for example, are eligible for $3,000 forgiveness on their loans as long as they hold an Alternate Route Teaching License and are teaching in a shortage area. The deadline for the Mississippi Teacher Loan Repayment Program (MTLR) is March 31. For additional information, visit www.ihl.state.ms.us or call (601) 432-6997.
Special Education Teachers
Full-time special education teachers who work with children with disabilities may also qualify for up to $17,500 in loan forgiveness on their Federal Stafford Loans. And special education teachers who took out loans after July 23, 1992 may be entitled to have 100 percent of their Perkins Loans wiped out.
How to Apply
Loan forgiveness -- and a debt-free future -- may just be a phone call away. Before anything else, call or visit your alma mater?s financial aid office to find out whether you qualify. The DOE also runs an informational hot line called the Federal Student Aid Information Center (FSAIC), which can be reached by dialing (800) 433-3243.
"We advise teachers to speak with the financial aid office at the school where the loan was taken out," said Derek Jones, a customer service representative for federal student aid information center. Jones also refers hot-line callers to the government's student financial aid Web site.
Among other helpful suggestions:
• Loans are sold like mortgages today, so be sure to find out who is currently holding your loan. "If your loan was purchased because it went into default or you consolidated, it may not be the original lender," Jones said.
• The Loan Forgiveness Directory is a comprehensive guide to more than 200 federal and state agencies, employers, schools and colleges offering loan forgiveness programs. Eligibility requirements, award amounts, and application procedures are listed as well.
• The American Federation of Teachers maintains a list of loan forgiveness and teacher scholarships programs.
• When filling out the correct loan forgiveness application, be sure to have either your principal or superintendent certify and sign the document. "My biggest tip is that the personnel administrator at the school is not the certifying official; the principal is," said Sam Wilson.
• Don't forget the IRS. If the amount forgiven on your loan exceeds $600, it may be considered taxable income that must be reported to the IRS. Individual states treat loan forgiveness differently, so consult a licensed tax professional. (Pennsylvania, for example, does not treat loan forgiveness as taxable income.
Hope this helps some of you. Thanks for reading my blog!