During my first class, I asked my students a question, or rather their avatars, on the screen of our online class. I waited for an answer, but was given silence. As none of my students turned on the cameras, I couldn’t know why I didn’t get a reply, but some were probably using the phones or back in bed. I began to cry for futility and for a disappointment I no longer recognized.
Today, I am one of the hundreds of thousands of public school teachers who have dropped out of school since the start of the pandemic, according to the US Bureau of Labor Statistics. This way, I lost my loan cancellation promise that I had been counting on. My balance of nearly $ 50,000 will have to be paid in full.
Even so, I know that I made the best decision for my family and me. I was deeply unhappy and unfulfilled.
“If someone had the opportunity to significantly improve their financial situation and career satisfaction, I certainly couldn’t blame them for going ahead and putting forgiveness in the rearview mirror,” said Barry Coleman, director of the National Foundation for Credit Counseling.
Here are the factors I considered and the steps I took to protect my family’s financial health.
CHECK YOUR PROGRESS IN CREDIT LIABILITY
Borrowers typically need to make 120 payments on time, working full-time for an eligible employer, before they can apply for forgiveness for a Public Service Loan or PSLF.
In considering dropping out of education, I wanted to see how close I was to being completely forgiven. According to my FedLoan account, I missed 64 to 74 payments, depending on the loan. (MOHELA, a new loan service that is taking over a wallet previously owned by FedLoan Servicing, has a similar payment tracking program on its site.)
If you are closer to the loan amortization, it is worth postponing a career change. Some comments:
– Borrowers will receive loans for months in which they have failed to make payments during the current pandemic federal student loan interruption. They will still need to certify their employment during this period.
– There is a waiver of the right to cancel the public service loan, which may include previously ineligible payments towards the amount required. The combined PSLF form and employment certificates should be submitted for consideration by October 31, 2022.
– Teachers who serve low-income schools for five consecutive years may receive a loan waiver for federal loans of up to $ 17,500. This program, Forgiveness of Teachers Loans, is separate from the PSLF.
LOOK FOR BETTER COMPENSATION
With off-the-table loan amortization, I needed a repayment plan. First, I had to find a better paid job, which luckily went quickly.
“Depending on the career you choose to pursue and your new salary, your loan balance can be quickly recovered,” says Jillian Lucas, Founder of JML Career Coaching.
But there is more to consider than just the end result.
The salary of teachers is unique in several respects. As many teachers do not work during the summer, they are paid for 10 months of work, not 12. Teachers who want to change careers should take this into account when evaluating job offers.
In addition, public school teachers in many states are eligible for a traditional retirement pension, an increasingly scarce benefit. If you haven’t studied long enough to qualify, finding a job that offers a 401 (k) match may be a priority.
When considering new jobs, also look at bonuses, scholarships, equity, and insurance premiums. How does this relate to what you are giving up as a teacher?
LET THE REPAYMENT BEGIN
When it is no longer possible to cancel the loan, you will have to set a new repayment date. Online calculators can be helpful.
Next, consider which repayment approach is best for your new situation. To qualify for the PSLF, borrowers must enroll in one of four income-based repayment plans. But if you no longer qualify for a loan cancellation due to a career change, you don’t need to be tied to a particular plan.
There are also ways to accelerate the repayment date. You can send ‘extra’ money, such as a tax refund on your debt. Be sure to tell your loan servicer to apply any additional payments to your current balance, instead of counting them against your next month’s payments.
Or try the two-week payment method. Suppose your monthly loan installment is $ 500. Instead of paying $ 500 a month, you’ll pay $ 250 every two weeks. At the end of the year, you will make the equivalent of one additional month.
FORGIVENESS OR HAPPINESS?
By the time I finished teaching I had only 13 months of qualifying employment, I did not want a partial cancellation of my loan. I have already put in 12 years; couldn’t I do one more
Not.
I am not an impulsive or financially irresponsible person, but I love my job. Who was the teacher that I became and who will I be as a teacher, mother and wife after another year in this career? My sanity and the balance of my family would suffer greatly, and nothing – not even thousands of dollars in donation – is worth it.
“Everyone deserves a job they love,” says Lucas. “And money will only take you this far if you hate what you do.”
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This article was submitted to The Associated Press via the NerdWallet Personal Finance website. Jae Bratton is a writer at NerdWallet. Email: jbratton@nerdwallet.com.
RELATED LINKS:
NerdWallet: Two-Week Student Loan Payments Clear your debt faster
A waiver of the PSLF offers a way to get closer to loan amortization
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