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Teachers who have received certain federal loans to attend school and now serve in a designated low-income school or in a designated subject-matter shortage area may have the opportunity for partial loan forgiveness, deferment or cancellation of student loans, depending on the type of loan, date of the teacher’s first loan and length of teaching service.

Each year, the Texas Education Agency produces a list of designated low-income schools (those with greater than 30 percent of enrolled students from low-income families in districts eligible for Title I funds).

TEA's list of designated subject-matter teacher shortage areas for the 2008-09 school year are:

  • special education

  • mathematics

  • Science

  • Foreign language (languages other than English)

  • Bilingual/ESL

  • Technology applications

A teacher may request forgiveness on a Stafford loan if:
• The teacher received his/her first loan on or after Oct. 1, 1998; and
• The teacher had no outstanding balance remaining on any Federal Family Education Loan Program (FFELP) or Direct Loan Program at the time the first loan was made; and
• The teacher has been employed five consecutive years in a designated low-income school.

Qualifying teachers may be eligible to receive a total forgiveness benefit of up to $5,000 ($17,500 for secondary math and science teachers and special education teachers at either the elementary or secondary level, who took out their first Stafford loan on or after Oct. 1, 1998).

Teachers who took out their first federal Stafford or Direct Loan between July 1, 1993 and Sept. 30, 1998, have NO forgiveness or deferment benefits since Congress did not legislate the Stafford or Direct Loan forgiveness programs to include benefits for loans received prior to Oct. 1, 1998.

A teacher may qualify for cancellation (discharge) of up to 100 percent of a Federal Perkins Loan if the teacher has served full time in a public or nonprofit elementary or secondary school system as a

  • teacher in a school serving students from low-income families; or

  • special-education teacher, including teachers of infants, toddlers, children, or youth with disabilities; or

  • teacher in the fields of mathematics, science, foreign languages, or bilingual education, or in any other field of expertise determined by a state education agency to have a shortage of qualified teachers in that state.

Eligibility for teacher cancellation is based on the duties presented in an official position description, not on the position title. To receive a cancellation, you must be directly employed by the school system. There is no provision for canceling Perkins Loans for teaching in postsecondary schools.

Definition of Teacher

A teacher is a person who provides students direct classroom teaching, or classroom-type teaching in a non-classroom setting, or educational services directly related to classroom teaching (for example, school librarian or guidance counselor).

It's not necessary for you to be certified or licensed to receive cancellation benefits. However, your employing school must consider you to be a full-time professional for the purposes of salary, tenure, retirement benefits, etc. If you are a supervisor, administrator, researcher, or curriculum specialist, you are not considered a teacher unless you primarily provide direct and personal educational services to students.

Note that you also qualify for deferment while you're performing teaching service that qualifies for cancellation. Contact the school that holds your loan for information on applying for deferment.  Additional information can be found on the U.S. Department of Education Web site.

Another program available to teachers is a public service loan forgiveness program (Title IV, Page 17) which discharges any remaining debt after 10 years of full-time employment in public service, including jobs in public education. The borrower must have made 120 payments as part of the Federal Direct Loan program in order to obtain this benefit. Only payments made on or after October 1, 2007 count toward the required 120 monthly payments. (Borrowers may consolidate into Direct Lending in order to qualify for this loan forgiveness program starting July 1, 2008.)

The borrower must be employed full-time in a public service job for each of the 120 monthly payments. Although Perkins Loans are not eligible for public service loan forgiveness, if they are included in a Federal Direct Consolidation Loan the entire consolidation loan, including the Perkins Loans, is eligible for public service loan forgiveness. One may use income-based repayment and income-contingent repayment on such a consolidation loan. (Perkins loan borrowers will need to consider the tradeoffs of including the Perkins loans in a federal direct consolidation loan. When Perkins loans are consolidated, they lose several favorable benefits, such as subsidized interest, a 9 month grace period, and a generous loan forgiveness program). More information is available here.

Updated: 08/17/10