Even teachers can find themselves in a bad financial situation. Quite often it won’t even be a result of their own doing, simply because the starting salary for so many new teachers won’t keep up with monthly student loan payments after taking out money for rent, utilities and groceries. Fortunately, there is help in the form of the Teacher Cancellation Program.
This program is available for those teachers who have taken out a Federal Perkins Loan. Under Cancellation, eligible teachers can apply to have their loans either discharged or, if they meet the criteria, deferred for a time. A Teacher can be someone directly teacher student in a classroom, or someone performing educational services directly related to classroom teaching such as a librarian or guidance counselor. The basic requirements are an applying teacher must serve full time in a public or non-profit elementary or secondary school as one of the following:
- A teacher whose school serves primarily low-income students and families that qualified for Title I funding while employed there.
- A teacher of foreign languages, mathematics, science or any other expertise that a state education agency has determined to have a shortage of qualified teachers.
- A Special Education teacher of children with disabilities. This includes infants and toddlers.
Low Income schools are determined by that state. Student enrollment must be comprised of at least 30 percent of students that qualify for Title I funding. This includes all schools operated by or under contract with the Bureau of Indian Education on Indian reservations.
Subject Shortage teachers are determined by the state education agency in fields other than bilingual education, foreign language, math or science. The Department of Education has determined these fields as always in need, so if you taught in those fields, you must simply receive certification from your school that the majority of the classes you taught were in those subjects. The list of Teacher Shortage Areas can be found here.
Special Education Teachers
Special Education teachers must have a letter for their school on the school’s letterhead stating that you performed in this position for the required academic year. However, if you provided certain services, then you must also be licensed or registered with that state’s education agency for them and that those services were part of the school’s special education curriculum. Those services include occupational, physical and recreational therapy, psychological services and speech and language services.
If you meet these job criteria, then you can apply to be considered for loan cancellation or deferment as long as the school where you have been employed will confirm you worked there for at least one complete academic year on a full time basis. This one year can be divided between two schools, but the two semester halves should be accomplished within a twelve month period.
How Long Do I have To Teach?
You must be a teacher for one full academic year. An academic year is defined as one complete school year, or two half years from different school years.
Part Time at Two Schools
You can also work part-time at two or more schools simultaneously and be considered for loan cancellation or deferment if an administration official at one of the schools will review your records and certify full-time employment. This condition was added to help those teachers unable to secure full-time employment due to the current economy. The goal, as with the Teacher Cancellation Program as a whole, is to help you stay in the classroom.
If you have not served your academic year in the classroom, you may still be eligible. Guidance Counselors and School Librarians also qualify for loan cancellation and deferment. If you were an administrator, researcher or supervised others, you may be eligible if you can show that you still provided direct and personal educational services to students.
If you taught at a private school, you may also qualify to have your Perkins Loans cancelled or deferred. The school must be properly filed with the IRS as a non-profit organization and meet all requirements for elementary or secondary education within that state. You still have to meet the same minimum academic year requirement.
How Much Can Be Cancelled?
If you are eligible, 100% of your loan can be cancelled. All interest that accrues during the year in which you qualify for cancellation will also be cancelled
- 15% per year is cancelled for your first and second year of service
- 20% per year is cancelled for your third and fourth year
- 30% is cancelled for your fifth year, which will total 100% with the previous years
How Do I Apply?
You must request the appropriate forms from the office that administers the Federal Perkings Loan program at the school that holds your loan. For all of the criteria listed above, it is the individual school and its state education agency that decides if you qualify. If the decision goes against you, you cannot appeal to the Department of Education. Any legal fees you incur in order to have your Perkins Loan cancelled or deferred are your responsibility. Fortunately, most schools are very determined to keep good teachers in the classroom and will do their best to help you if at all possible.