As the alternative to your refinancing student loan with the help of private lenders, you can consider government programs. There are four main programs for loan forgiveness for teachers.
Public Service Loan Forgiveness (PSLF) Program
This program is available for teachers, who have already made 120 payments (have been paying for 10 years). You also must have a Direct Loan to qualify. If you have Perkins or FFEL loans, you must first consolidate it and then apply.
There are no strict requirements for the employment. Most of the public and private elementary school teachers will qualify.
All your previous payments must be made not later than 15 days after the defined day and after October 2019.
Teacher Loan Forgiveness
Another loan forgiveness teachers program will forgive up to $17,500 of the FFEL subsidized or unsubsidized or Direct loans. You must work full-time at least 5 complete years at the school. The first academic year must be after 1998.
Unfortunately, only mathematics or science teachers can qualify for the entire sum ($17,500). Other teachers can expect the government to forgive up to $5,000.
Perkins Loan Cancellation for Teachers
This teachers loan forgiveness program will forgive up to 100% of the Federal Perkins Loan. For this program, you must work full-time at a low-income school or teach certain subjects in other types of schools.
The program forgives the portions of the loan including the interest:
- 15% of the loan is forgiven for the first two years of the full-time employment;
- 20% is forgiven for the next two years;
- 30% is forgiven for the fifth year of your work.
If you want to know whether your school qualifies for this federal loan forgiveness for teachers, you can check out it. Even if you don’t work at a low-income school, you still can qualify if you teach science, mathematics, foreign languages, bilingual or special education or any other subjects that your state defined.
State-Sponsored Student Loan Forgiveness Programs
Each state developed its own loan forgiveness teachers program – you just should check out the options available for your state. Teachers that work in a high-need area have more options to qualify for forgiveness.
Before choosing a program for loan forgiveness for teachers, you should consult with your federal loan servicers to apply for the reasonable forgiveness.
Can You Prepay Student Loans?
Yes, you can prepay student loans. In fact, you can prepay all types of loans, even if the amount is not substantial. You can prepay a loan in full or only part of it. The full prepayment usually reduces the interest rate. The part prepayment reduces the principal amount unpaid. It reduces the EMIs and (again) the total interest that you pay.
Ideally, both types of prepayment are beneficial. Still, before making a decision, you should definitely talk to the specialist.
There are lenders, who charge the penalties in the case of the loan prepayment. In fact, they have no right to do it according to the Higher Education Opportunity Act. According to the Act, every borrower can prepay his loans without paying penalties.
Therefore, student loans no prepay off penalties exist. Before signing the agreement, you should check out Truth in Lending disclosures and the contract. These documents contain information about any penalties for the early payment. If the loan contains the penalty, you should negotiate with your lender to remove it or change the loan. Defend your rights and don’t let lenders cheat on you.
If the lender insists on the prepayment penalties, you can send a complaint to the to the Consumer Financial Protection Bureau (CFPB).
If you can’t figure out whether paying off the student debt earlier is beneficial for you, you should use a help of the prepayment calculator before applying to the lender.