Financial Aid for Teachers How to Save Thousands on Your College Education

Good teachers can be hard to find, and the government is willing to pay to get more qualified people into the field. Here’s an in-depth look at federal financial aid for teachers, as well as other sources of grants and scholarships to help the educators of tomorrow get from college to career without drowning in a sea of debt.

Meet the Expert

Maryalene LaPonsie has been reporting on the trends in higher education and online learning for nearly five years. She holds a bachelor in arts degree from Western Michigan University.

Introduction

In 2014, Casa Grande Union High School District in Arizona didn’t receive a single job application for its 19 faculty openings. According The Arizona Republic, the district superintendent eventually had to look not only out of the state, but out of the country to fill the available positions with 11 new math and science teachers making their way from the Philippines to Arizona classrooms.

Arizona is just one state in the throes of a significant shortage of teachers. Oklahoma, North Carolina and Michigan are among the others reportedly experiencing teacher shortages either statewide or in specific areas.

In response to the growing demand for qualified teachers, the government has rolled out a number of special financial aid programs for teachers that may forgive student loans, cancel outstanding loan debt or even provide thousands toward a degree. In addition, states may have their own incentives to help today’s students become tomorrow’s teachers.

Of course, students enrolled in teaching degree programs may also be eligible for the same aid as all other students. These opportunities include grants, scholarships, fellowships, loans and more. If you’re planning a career as an educator, here’s what you need to know about your financial aid options.

Federal Financial Aid: Half Price Degrees and More

Some of the most lucrative financial aid for teachers comes from the federal government. These programs may result in thousands of dollars in saved tuition. However, for many options, the catch is the federal government may make certain employment requirements for you to be eligible for funding. Let’s examine some of today’s most popular government-sponsored financial aid programs for teachers.

TEACH Grant

TEACH grants were created in 2007 as part of the College Cost Reduction and Access Act. Known more formally as Teacher Education Assistance for College and Higher Education grants, these awards are not based on need and offer up to $16,000 in tuition grants to eligible undergraduate students and $8,000 to graduate students. In order to receive the grant, students must agree to teach full-time for four years in a low-income area and a high-need field. The law defines high-need fields as the following:

  • Mathematics
  • Science
  • Foreign language
  • Bilingualeducation
  • Special education
  • Reading specialist

While in school, students must be enrolled in a TEACH-eligible program and maintain a GPA of 3.25. After graduation, individuals must serve as a highly qualified teacher in a low-income school or educational service area. Teachers have an eight-year window in which to complete their four-year service agreement. However, the service agreement may be suspended if you meet certain requirements. For example, if you return to school for a TEACH-eligible graduate program, your eight year window would be put on hold while you are in school. It may also be suspended if you are deployed for active-duty military service or meet one of the qualifying reasons under the Family and Medical Leave Act. Should you become totally and permanently disabled or have an extended military call of duty, your service obligation may be cancelled.

In the event you fail to meet your service obligation, the government will convert your TEACH grant to a direct unsubsidized loan with interest accruing retroactively to the date the grant was disbursed. Although TEACH grants are typically $4,000 a year, the Budget Control Act of 2011 caused a reduction in award amounts. For the 2014-2015 school year, the maximum award is $3,708. However, even with this reduced award amount, a TEACH grant could save you up to 50 percent off the price of tuition at some institutions. The College Board notes the average cost of in-state tuition at a public, four-year institution is $9,139 for 2014-2015. Universities in some states may have even lower tuition rates which could mean a TEACH grant may cover as much as half of a degree’s tuition costs.

To apply for a TEACH grant, students should talk to their school’s financial aid department.

Teacher Loan Forgiveness Program

While the TEACH grant can cover tuition for students still in school, the Teacher Loan Forgiveness Program is a way for current and future teachers to eliminate up to $17,500 worth of student loan debt. However, not every teacher will qualify for the loan forgiveness program and not every loan can be forgiven. Eligible teachers must have taken out their loans after October 1, 1998, and only Direct Loans or loans through the Federal Family Education Loan Program qualify for forgiveness.

In addition, individuals must have five full-time, consecutive years of teaching service at an eligible school to have their loans forgiven. Eligible schools include those that qualify for Title I funds, those in which 30 percent of enrolled students are eligible for Title I services and those designated by the government in an annual government listing of low-income schools. At least one of those five years of teaching must have occurred after the 1997-1998 academic year.

Beyond serving at an eligible school, teachers must meet other requirements as well. Depending on their qualifications, teachers may find they can have either $5,000 or $17,500 worth of loans forgiven.

  • Loan forgiveness of up to $5,000:

    Available to any highly qualified full-time elementary or secondary teacher at an eligible school.

  • Loan forgiveness of up to $17,500:

    Available to highly qualified full-time math or science teachers in eligible secondary schools or highly qualified special education teachers who meet certain criteria.

Since the designation of highly qualified teachers was not available in many areas until the 2004-2005 academic year, individuals teaching at eligible schools prior to 2004 may be eligible for $5,000 in loan forgiveness so long as they had demonstrated knowledge at the elementary level or were teaching either teaching in an area relevant to their major at the secondary level.

The Teacher Loan Forgiveness Program is only available for outstanding loan balances and will not provide a refund for payments already made. TG, a nonprofit promoting educational access, recommends teachers will low loan balances may want to request a forbearance to maximize the amount they are able to have forgiven. To apply, teachers must complete and submit a Teacher Loan Forgiveness Application. The form is available online here:

http://ifap.ed.gov/dpcletters/attachments/GEN1419AttachTeacherLoanForgivenessApp.pdf

Teacher Loan Cancellation Program

Like the Teacher Loan Forgiveness Program, the loan cancellation program wipes out outstanding student loan debt. Unlike the forgiveness program, there is no cap on how much debt can be cancelled, and 100 percent of outstanding loans can be eliminated. The catch is the only loans which qualify for cancellation are those from the Federal Perkins Loan Program.

To receive a discharge from their outstanding Perkins loans, teachers must teach full-time for at least one complete academic year. They must also meet one of the following criteria:

  • Teach in a school serving low-income families.
  • Teach special education.
  • Teach math, science, a foreign language, bilingual education or another field deemed high-need by a state education agency.

Teachers at both public schools and nonprofit private schools may be eligible for the Teacher Loan Cancellation Program.

While a partial discharge is available after only one year of teaching service, individuals must work in a qualified position for five years to have their entire Perkins Loan balance cancelled. The Department of Education notes you may also qualify for a deferment while teaching which can let you avoid making payments prior to applying for your loans to be cancelled. Teachers should contact the office that administers their Perkins Loan to apply for the Teacher Loan Cancellation Program.

Other Forms of Federal Financial Aid

While the TEACH grant, loan forgiveness and loan cancellation programs provide targeted financial aid for teachers, students enrolled in education degrees may also be eligible to a number of other federal programs. The following are the major federal financial aid programs which are open to all students regardless of their major.

Pell Grants

Federal Pell Grants are based upon household income and only available to undergraduate students who have not yet earned a bachelor’s degree or a professional degree. The maximum award was $5,730 in 2014-2015 and is renewable for up to 12 semesters of coursework.

Federal Supplemental Educational Opportunity Grants

Known as FSEOG, these grants are awarded to students with significant financial need. Although funded by the federal government, they are administered through campus financial aid departments and not every school participates. Awards range from $100 to $4,000.

Direct Loans

Available as either subsidized or unsubsidized loans, Direct Loans are a popular option to finance a degree. Individuals who demonstrate financial need may be eligible for subsidized loans in which the government pays the interest until a student begins the repayment period. All students, regardless of their financial need, can receive unsubsidized loans in which interest begins accruing immediately. Caps on Direct Loans vary depending on a student’s year in school and whether they are a dependent or independent student. Overall dependent students can borrow up to $31,000 while independent undergrads can take out $57,500. In both cases, up to $23,000 of that money can be subsidized for financially eligible students. Graduate and professional degree students are eligible for up to $138,500 in Direct Loans, of which $65,000 can be subsidized. Interest rates for the 2014-2015 academic year range are 4.66 percent for undergraduate loans and 6.21 percent for graduate or professional loans.

Perkins Loans

The Federal Perkins Loan Program is another loan option for financially eligible students. Like the FSEOG, these loans are funded by the government but administered by schools and not all schools participate in the program. Undergraduate students can borrow $5,500 a year, for a total of $27,500. Graduate students are limited to $8,000 and a total of $60,000. The total for graduate students includes any money they may have taken out as an undergrad. The interest rate for Perkins Loans is currently 5 percent.

PLUS Loans

The final federal student loan option is the PLUS Loan. These loans are available only to parents of dependent undergraduates or students pursuing a graduate or professional degree. Loans can be up to the cost of attendance, minus any other financial aid awarded to the student. For 2014-2015, the interest rate for PLUS Loans is 7.21 percent. There is also a 4.292 percent loan fee applied prior to the distribution of the loan funds.

Work-Study

For students who don’t want to take out loans, a work-study program is one way to avoid going into debt. The federal government provides money to schools to fund part-time jobs reserved for students who financial need. The jobs can vary in type and pay, but all positions earn at least the federal minimum wage.

To apply for the above programs, students must first complete the Free Application for Federal Student Aid, otherwise known as the FAFSA. You can complete the application or find further information about the application process by visiting https://fafsa.ed.gov.

State Financial Aid: More Money Options

While federal programs are some of the best-known options for financial aid for teachers, don’t overlook your state as a source of money to pay for your education degree. Some states have their own scholarship and grant programs available to students of every major. Others may have specific programs for future teachers, such as scholarships or loan forgiveness programs operated at the state-level. Each state will have its own programs, but here are examples from three states.

Illinois
  • Minority Teachers of Illinois Scholarship Program: Known as the MTI scholarship, this award is offered to minority college students who agree to teach in Illinois schools that have at least a 30 percent minority student population. Eligible students may receive $5,000 per year for up to four years.
  • Illinois Special Education Teacher Tuition Waiver Program: The SETTW program waives tuition for students planning to become special education teachers. Up to 250 waivers are granted each year to Illinois residents.
  • Illinois Teachers Loan Repayment Program: For students who qualify for the federal Teacher Loan Forgiveness Program, the state of Illinois is willing to match up to $5,000 toward loan repayment.
Massachusetts
  • Paraprofessional Teacher Preparation Grant Program: Massachusetts residents who have worked as an education paraprofessional for at least two years may be eligible for grant money to pursue a teaching degree. Current awards range from $4,000 for those enrolled in a community college to $7,500 for those pursuing a degree at a private institution or a public university.
  • Math and Science Teachers Scholarship Program: This scholarship is awarded at variable levels to current educators who are returning to school in order to be licensed as a math or science teacher. Priority is given to teachers working in a high-need district, such as one identified for corrective action or one in which 40 percent or more of the students come from low-income families.
  • Incentive Program for Aspiring Teachers Program: High-achieving students may have their tuition waived for their third and fourth year of college under this program. Applicants must be Massachusetts residents, be enrolled in an approved institution and agree to teach in a state public school for at least two years after graduation.
New York
  • Math and Science Teaching Incentive Scholarship: U.S. residents studying at New York institutions may be eligible for this scholarship so long as they agree to work five years as a math or science teacher in a secondary school. The scholarship can be awarded annually for up to four years, and the 2014-2015 award amount is $6,195.

This is just a small example of the type of financial aid for teachers available through states. To learn what is available where you live, check with your state’s education agency or board. You can find links on the National Association of Student Financial Aid Administrators website:

http://www.nasfaa.org/students/state_financial_aid_programs.aspx

Private Sources of Financial Aid for Teachers

To finance my schooling, I took out federal loans and private loans from Sallie Mae. I also had scholarships that I applied for and scholarships for my grades offered through Saginaw Valley State University.

Connie Leckenby, 2nd Grade Teacher BA, Saginaw Valley State University

Finally, it isn’t only the government that is trying to help teachers pay for their degrees. There are also plenty of financial aid options from private sources. Like state financial aid, some of these programs may be specifically for education majors while others could be option to any undergraduate or graduate student.

Private financial aid can be broken down into the following four categories.

1. Scholarships

Scholarship money is typically awarded on a merit basis. While financial need may be taken into consideration by some programs, it is often not the determining factor. Scholarships are free money and do not need to be repaid. Teach.org, a website created through a collaboration of Microsoft, State Farm and the Department of Education, maintains a comprehensive list of scholarships for future educators. You can browse the list at this link: https://www.teach.org/teaching-scholarships

Other websites where you can search for scholarships include the following.

2. Grants

Like scholarship money, funds from grants do not need to be repaid. However, rather than being merit based, most grants are awarded to those with financial need. Grant programs are most commonly administered by the federal and state governments although colleges, universities and private organizations may offer them as well. You can search for grants on many of the same sites listing scholarships.

3. Fellowships

Fellowships are a specific type of grant that most often support graduate students or, more frequently, research. Fellows may have tuition waived or receive a stipend to cover their expenses. Although fellowships for new teachers are relatively uncommon, they do exist. For example, the NYC Teaching Fellows program is available for professionals who want to transition to a teaching career.

4. Private loans

The last private financial aid option for teachers is private loans. These are loans through banks and other institutions. While they do provide a source of cash for college, it may be best to consider private loans a last resort since their interest rates may be higher than those offered through government programs. In addition, private loans are not eligible for federal loan forgiveness or cancellation programs.

Teaching is often described as a vocation as much as a profession. If you feel as though you’re called to make a difference through a career as a teaching, the first step is gain the right degree. While a degree isn’t free, there are plenty of financial aid options for teachers. Request more information from school financial aid department to learn more about which programs you could qualify for.