The Teacher Loan Forgiveness Forbearance is often times misunderstood. Unlike the DoD Repayment Forbearance, simply being in the program is not enough.

Those who qualify for Teacher Loan Forgiveness qualify for either a $17,500 or $5,000 reward. Now if you only have $10,000 in loans and qualify for $17,500 in forgiveness they are not going to make you make payments on something that could be completely forgiven at the end of the 5 years. The caveat is that this is what your total would be at the end of the 5 years including interest.

So let us look at some examples:

-First the easy one. Borrower has $25,000 in student loan debt. Will not qualify regardless of what plan they apply for.

-Another easy one. Borrower has a $4,500 dollar loan at 6.0% interest. That is $270.00 a year in interest x 5 years=$1,350.00. So at the end of the 5 years the borrower’s debt would be $5,850. If they qualify for the $17,500 forgiveness they could use the forbearance.

-However same borrower qualifies for the $5,000 forgiveness. They could not use the forbearance because at the end of 5 years there would not be enough to cover the total

-Same borrower, final example. Borrower does not qualify year one but pays down balance to $4,000.00 after one year. So the interest per year is now $240.00 and they only have 4 years left to qualify. $240.00 x 4=$960.00. This gives them a total of $4,960.00 so after the first year (and enough payments to get principal down to $4,000) borrower would qualify for forbearance.

As always if you think you qualify contact your servicer or download the form off the website. This form also has many criteria tied to it so be sure and read everything you need to send in!

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