How I Dumped $22,500 of Debt Using Student Loan Forgiveness

Adulting, Author: #NAMB Guest Author

Yes, that’s right, $22,500! It took me five years of working as a teacher, but that’s 22.5 grand that I didn’t have to pay off, and it’s 22.5 grand in my pocket!

Now, how did I do this?

Well, it all started in college, when I was told about the opportunities to teach in a low income school and have my student loans forgiven. I took this opportunity and ran to a position that would allow me to reap the benefits of loan forgiveness for teachers.

Due to the fact that I am a math teacher, I was eligible to receive up to $17,500 in student loan forgiveness, but it’s important to note that other teachers in different fields received different amounts. Not to mention, other professions — including medical, nursing, and federal government work — offer student loan forgiveness in different amounts.

Above, I’ve only accounted for $17,500 of my student loans. You may be thinking, where did the other $5,000 come from then? I got lucky enough to stumble onto a second form of student loan forgiveness. This program forgave 100% of my Federal Perkins loans over the course of five years. Luckily, I stumbled onto this option a year after I started teaching and was still able to have $5,000 of my $5,700 loan forgiven.

Now, what steps did I take?

My process of having my student loans forgiven can only be explained as confusing. To try and avoid as much confusion as we can, let’s look at some background knowledge on each loan type, and explain the steps to receive student loan forgiveness.

Federal Perkins Loans forgive 100% of loan balance to teachers in low-income schools over five years. During those five years of teaching, loans are deferred (no payment required). Interest accrued is also forgiven at the end of each year. At the end of each school year, applicants have to fill out a form. This form defers the payments for the upcoming school year, and forgives a portion of the balance each year.

What did this all mean for me? After five years of filling out forms, my Federal Perkins Loan was forgiven in full. That’s $5,000 gone — so now, let’s talk about the other $17,500.

Federal Direct Subsidized Loans and Federal Direct Unsubsidized Loans forgive up to $17,500 for Math/Science/SPED Teachers after completion of five years of teaching. During those five years of teaching, monthly payments are still required, and interest still accrues. If you are in school, you can defer payments to these loans. Direct Subsidized Loans (undergrad) do not accrue interest during the deferral period, and Direct Unsubsidized Loans (graduate) accrue interest during the deferral period.

It took some creative measures to receive the full $17,500 in loan forgiveness. In December of 2013, I only had $11,573 of Direct Subsidized Loans left. Based on my required payments, the loan would have been paid off prior to my completion of five years of teaching.

I was averaging paying off $4,000 of principal in six months. December of 2013 was just over 18 months from the date of completing my 5th teaching year. Luckily, I was looking into graduate school and a representative from a university had mentioned that I could have my loans for graduate school forgiven at the end of my 5th year of teaching. I was shocked, but I also had to use this newfound knowledge. I made the decision to take out a loan for more than $6,000, which would put me over $17,500 in student loans. I did this in the spring semester of 2014, and just let the money sit in my savings account.

While that money sat in a savings account, the student loans were in deferral, because I was attending graduate school. Therefore, my loans from undergrad remained at $11,573, and they did not accrue any interest. My loans from grad school, however, did accrue interest.

In June of 2015, I printed out the required forms and filled them out as described. On August, 11, 2015, I was notified that my student loans had been forgiven in full!

Crazy things happen all the time in life. Just make sure to have a backup plan, like some of the tips offered here about refinancing your student loans. We made sure to have $17,500 in the bank, just in case something happened. Nothing crazy did happen, and we were able to put a down payment on a house.


About the Author:


Seth Boschen is starting his 8th year as a teacher and runs his own personal finance blog over at Summit of Coin. Through meticulously watching his money and extreme frugality, he was able to pay down over $29k in student loan debt in just seven months. You can learn more about his story and follow him here.

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