According to a report by the National Council on Teacher Quality. Teachers’ pay raises dropped from 3.6% in the 2008 – 2009 school year to 1.3% in the 2011 – 2012 year.
In fact, The National Center for Education statistics reveal that the average teachers’ salary gets an increase of less than 1% in inflation adjustment terms over the last 10 years. The average teacher pay of $56,643 is lower than the average pay in many other professions that require college and graduate degrees. So, how do teachers with outstanding student loans go about paying their student loans?
Income-Based Repayment Plans for Teachers
There are two exciting ways for teachers hurt by recession to pay off their student loans.
Most student loan borrowers are in a 10-year time-based repayment plan with a fixed monthly payment based on the total amount of the loan. Unfortunately, it may be impossible to make those payments.
The Department of Education allows student loan borrowers who qualify for Income-Based Repayment plans to switch from a time-based standard repayment plan to programs such as IBR, ICR or PAYE.
Income-Based Repayment plans calculate your monthly payments on the basis of your adjusted gross income, family size and the total amount of your direct loans. If you are married and filing your taxes jointly, your spouse’s income will be included in these calculations.
Income-Based Repayment plans can lower your student loan payments and help you afford things that you want to provide for yourself and your family. But, better yet, the government will forgive any remaining loan balance after you pay your federal student loans through an Income Based Repayment plan for a period not to exceed 25 years!
Income-Contingent Repayment Plans for Teachers
There’s no partial financial hardship threshold you have to meet before enrolling in ICR.
Only Federal Direct Loans are eligible for Income-Contingent Repayment which include Direct Subsidized and Unsubsidized Stafford loans, Direct GRAD PLUS loans and Federal Direct Consolidated loans. If you have FFEL loans, you’ll need to convert those to Federal Direct.
Direct Consolidated loans that repaid Parent PLUS loans are eligible for ICR. If you have consolidated a Parent PLUS loan, Income-Contingent Repayment might be the right answer for you.
Your payment will not exceed more than 20% of your discretionary income. Your lender or servicer will calculate the amount of the monthly payment by using your adjusted gross income (including your spouse’s income if you filed your taxes jointly), family size and total outstanding Direct loans.
Pay-As-You-Earn Repayment Plan for Teachers
If you student loan debt is high relative to your income, you may qualify for the Pay-As-You-Earn (PAYE) Repayment Plan. This plan can help keep your monthly student loan payments affordable.
• Under Pay-As-You-Earn:
If your monthly payment is 10% of your discretionary income and will never be more than the amount you will be required to pay under the 10-year Standard Repayment Plan.
If your monthly Pay-As-You-Earn payment amount doesn’t cover the interest that accumulates on your loan each month, the government pays your unpaid accrued interest on Direct Student Loans for up to three consecutive years from the date you begin repaying your loan under the Pay-As-You-Earn program.
• 20-year Forgiveness:
If you repay under the Pay-As-You-Earn program, and meet certain other requirements, any remaining balance will be forgiven after 20 years of qualifying repayment.
• 10-year Public Service Loan Forgiveness is Available:
If, while you are employed full-time for a public service organization, you make 120 on-time full payments under the Pay-As-You-Earn program.
Well, what about Public Service Loan Forgiveness?
Teachers who work in a county school system, state community colleges or universities are eligible to participate in the Public Service Loan Forgiveness Program.
The Public Service Loan Forgiveness (PSLF Program) is a Federal student loan forgiveness program for Federal student borrowers who work in “public service jobs.” PSLF will forgive your remaining student debt after 10 years of eligible employment and qualifying loan payments. Did you know that during that 10 years an Income-Based Repayment (IBR plan) is available to you to keep your loan payments affordable. Call us to see if you qualify!
What should I do next?
You can learn what’s right for you by contacting our Tampa Bay student loan attorney, Nancy Cavey, who can help you with your student loan issues regardless of where you live in the United States. She can meet with you and discuss student loan modification and other debt relief strategies that will make the repayment of your student loan debt and help you regain your financial footing.
Contact us today at 727-828-9955.