Teacher Loan Forgiveness Guidelines

1
Teacher Loan Forgiveness Guidelines For FFELP,
Direct Lending, and Perkins August 2005
2
Overview

• Originally included in reauthorization of HEA
  1998
• Final rule
• Published November 1, 2000
• Effective July 1, 2001
• Taxpayer-Teacher Protection Act 2004

3
Taxpayer-Teacher Protection Act of 2004

• Signed October 30, 2004
• New highly qualified definition
• Up to 17,500 for highly qualified teachers who
  are
• Secondary or elementary special education
  teachers, or
• Secondary math or science teachers

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Maximum Forgiveness Amounts

• FFEL/DL (combined)
• 5,000 for a highly qualified full-time
  elementary or secondary school teacher
• 17,500 for a highly qualified secondary math
  or science teacher, or an elementary or secondary
  special education teacher
• Perkins
• Full amount of the loan

5
Timeframe for Forgiveness

• FFEL/DL
• After completing five consecutive complete years
  of qualifying full-time employment prior to
  applying for forgiveness

6
Timeframe for Forgiveness

• Perkins
• After completing
• 1 2 years 15 forgiven per year
• 3 4 years 20 forgiven per year
• 5 years 30 forgiven for fifth year

7
Borrower Eligibility

• FFELP/DL
• New borrower as of October 1, 1998
• No outstanding loan balance under the FFELP or
  Direct Loan Program as of October 1, 1998 or on
  the date the loan is obtained after October 1,
  1998

8
Borrower Eligibility

• FFEL/DL Qualifying teaching service began
  before October 30, 2004
• Full-time elementary school teacher with
  knowledge and teaching skills in reading,
  writing, mathematics, or other elementary
  curriculum
• OR
• Full-time secondary school teacher in a subject
  area relevant to academic major

9
Borrower Eligibility

• FFEL/DL Qualifying teaching service began after
  October 30, 2004
• To qualify for 5,000 the borrower must be a
  highly qualified full-time elementary or
  secondary teacher
• OR
• To qualify for 17,500 the borrower must be a
  highly qualified full-time mathematics or
  science teacher, or elementary or secondary
  special education teacher

10
Borrower Eligibility

• Perkins
• All teachers in designated low-income schools
• OR
• Special education, mathematics, science, foreign
  language or bilingual education, or areas of
  expertise designated as shortage areas by a state
  education agency

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Definition of Eligible School

• FFEL/DL and Perkins
• Low-income school that qualifies for Title I
  funding and more than 30 of their enrolled
  students qualify for services under Title I
• Listed in Annual Directory of Designated
  Low-Income Schools for Teacher Cancellation
  Benefits
• Perkins Only
• Specified fields of expertise that the state has
  designated as a shortage area

12
Directory of Designated Low-Income Schools

• FFEL/DL and Perkins
• List of eligible schools is available May 1st
• If not available, the Secretary uses the
  preceding years list

13
Definition of Elementary School

• FFEL/DL
• As defined by the State
• May include Pre-K and Kindergarten depending on
  the state
• Perkins
• Includes education below first grade if the State
  considers such a program to be part of its
  elementary education program

14
Definition of Teacher

• FFEL/DL
• Direct classroom or classroom-type teaching
• No librarians, guidance counselors, or
  administrators
• Perkins
• Direct classroom or classroom type teaching
• Includes educational services such as school
  librarian or guidance counselor
• Must be direct employee of school system

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Definition of Academic Year

• FFEL/DL
• One complete school year,
• Two complete and consecutive half years at
  different schools, or
• Two complete and consecutive half years from
  different school years
• Half years exclude summer sessions, and fall
  within a 12-month period

16
Definition of Academic Year

• Perkins
• One complete school year or
• Two half years
• From different school years, excluding summer
  sessions
• Complete, and consecutive
• Fall within a 12-month period

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Exceptions to Teaching a Full Academic Year

• FFEL/DL
• Can be counted as one complete academic year if
  borrower completes half of year and does not
  begin second half due to
• FMLA condition
• Return to post-secondary education related to
  performance of teaching service
• Call to active duty status for more than 30 days

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Exceptions to Teaching a Full Academic Year

• Perkins
• Can be counted as one complete academic year in
  case of illness or pregnancy, if the borrower
  taught first half of year and began second half
  of year

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Definition of Full-Time

• FFEL/DL
• Standard used by the State to define full-time
  teaching
• Can be a combination of teaching at multiple
  qualifying schools
• Perkins
• Standard used by the employing school
• Can be a combination of teaching in multiple
  qualifying schools

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Prevention of Double Benefits

• FFEL/DL and Perkins
• No borrower may, for the same service, receive a
  benefit under both this subsection and Subtitle D
  of Title I of the National Community Service Act
  of 1990 (Americorps)

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Prior Teaching Service

• FFEL/DL
• One of the years of the qualifying teaching
  service must be after receipt of the loan for
  which forgiveness is sought
• Perkins
• Cannot qualify for cancellation of a loan
  received during the period that the borrower
  performed services for which cancellation is
  sought

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Borrower Payments

• FFEL/DL
• No refund of payments made by borrower (or on
  behalf of borrower) on canceled loans
• Teacher Loan Forgiveness Forbearance
• Perkins
• No refund of payments made by borrower (or on
  behalf of borrower) on canceled loans unless
  there was a school error in not granting
  cancellation

23
Defaulted Loans

• FFEL/DL
• May be forgiven if satisfactory repayment
  arrangements have been made with the holder of
  the loan
• Perkins
• May be forgiven unless loan was accelerated, then
  only the service provided prior to acceleration
  is forgiven
• If defaulted loan has been rehabilitated,
  borrower may apply for cancellation