Student loan debt can put teachers in a bind

SHARE Student loan debt can put teachers in a bind

The combination of rising college costs and a starting salary that is lower-than-average for college graduates can put new teachers in a financial bind.

Michelle Grissom has been a teacher for 22 years, has three degrees and owes about $100,000 in student loan debt.

She was at the state Capitol in Denver last week rallying with thousands of other teachers demanding more state funding for public education in Colorado.

The protests in Colorado follow similar rallies, walkouts and teacher strikes in Arizona, Kentucky, Oklahoma and West Virginia.

“We are in trouble and as an educator I see what that does to our kids,” Grissom, a seventh-grade social studies teacher for the Douglas County School District in Colorado, said about the lack of funding.

Teachers across the country cite underfunded classrooms, stagnant pay and changes in retirement programs as reasons for the growing frustration. Also on teacher’s minds: Crushing student loan debt.

The combination of rising college costs and a starting salary that is lower-than-average for college graduates can put new teachers in a financial bind.

Grissom, 48, graduated from Metropolitan State College of Denver with a bachelor’s degree in history and education in 1996 with about $60,000 in student loan debt and became a teacher with a starting salary of around $25,000.

Her monthly loan payment was $400 a month and she says at times it was a struggle to pay her rent. She has often had to work a second job to help pay her bills, including as a restaurant hostess and at greeting card store Papyrus in Denver’s Cherry Creek Mall.

Grissom went on to get her master’s degree in education administration to help advance her career and took on more debt. She currently has a salary of $67,000 and a monthly loan payment of $585.

Graduating with debt

College graduates entering the teaching profession face many challenges, not the least of which is financial.

The national average public school starting teacher salary for 2016-17 was $38,617, according to the National Education Association. That falls far below the overall average starting salary of $50,359 for a bachelor’s degree graduate across all fields.

About 70 percent of college graduates have student loan debt. The average amount owed was $30,100 per borrower, according to the Project on Student Debt, an initiative of the nonprofit research organization The Institute for College Access & Success.

So how much of a typical starting teacher’s monthly budget would have to go to paying off student loans?

Using the average debt owed of $30,100 and a 10-year loan term with a 6 percent interest rate, the monthly payment would be about $334, according to Greg McBride, chief financial analyst for Bankrate.

That would represent about 10 percent of monthly pay for a public school teacher earning the average starting salary, McBride said.

Other estimates for student debt at graduation are higher. Mark Kantrowitz, a consultant on student loans and publisher of PrivateStudentLoans.Guru, puts that figure at $35,000-$40,000.

For graduates with larger amounts of student loan debt at higher interest rates, the monthly loan payments become a huge burden. Kantrowitz said 10 percent is reasonable but as the percentage of pay creeps up towards 15 percent, the debt burden becomes a stretch. 

More education, more debt

State certification and a bachelor’s degree are usually the minimum requirements to become a teacher. And many states require continuing education to maintain certification and further education is encouraged to help advance your career.

“If you want to move up in education, you have to have more education, you have to be certified in something else,” said Tyson Gardin of Fort Mill, S.C., a physical education health teacher.

That cost comes out of the educator’s pocket.

Gardin, 38, has about $100,000 in student loan debt and says a lot of the debt came from getting certifications and his master’s degree.

Advancing himself while paying off debt has been a struggle, he said. “Trying to do that and manage what you already have in your life, your mortgage, utilities, everyday living and then you have this debt on top of it.”

He’s not alone in that sentiment.

“I don’t think the understanding is there on how much time and commitment there is to being a teacher,” Sara Holloway of Monongahela, Pa., said, citing out-of-pocket costs for classroom materials, ongoing education and the off-the-clock hours.

Holloway, 40, has been a teacher for 18 years, has a master’s degree in education and still owes more than $100,000 in student loan debt.

Her starting teacher salary was under $40,000 in the Pittsburgh public schools in 2000. She says she has struggled at times with her monthly loan payments, working second jobs waitressing and bartending to help pay the bills.

Many months, she said, she was living paycheck-to-paycheck.

Her current salary is $78,000. She pays $380 a month on her loans on an income-based loan payment plan. There are various programs that can help teachers alleviate their debt.

Loan forgiveness programs

There are several types of loan forgiveness programs available for teachers with student debt. Here are some of the programs available for teachers:

Public Service Loan Forgiveness (PSLF) 

Under this program, qualifying public service employees, including teachers, with Federal Direct Loans can have their loan balance forgiven after making 120 payments (about 10 years’ worth) under a qualifying repayment plan.

The payments do not need to be consecutive but are only counted while employed full-time by a qualifying public service employer.

Private loans and non-direct government loans are not included in this program but borrowers can consolidate other loans into direct loans. But any consolidation of non-direct loans restarts the required 10-year repayment clock and previous payments will not count.

One component important to note: Teachers can apply for an income-based repayment plan, which is what the Department of Education recommends. Income-based plans cap monthly payments based on income. Because of that, and because starting salaries are lower, the total amount of debt forgiven after 10 years would be higher than on a standard repayment plan, the department says.

Teacher Loan Forgiveness

Full-time teachers that complete five consecutive years in a low-income school or educational service agency can get a maximum of either $5,000 or $17,500 of their Federal Direct Loans and Stafford Loans forgiven under this program.

Teachers who are highly qualified math or science teachers in eligible schools, or special education teachers, can receive up to $17,500. All other eligible teachers can get up to $5,000.

It is possible to qualify under both the Teacher Loan Forgiveness and Public Service Loan Forgiveness programs but teachers cannot do so for the same time periods.

Federal Perkins Loan Teacher Cancellation 

Teachers with Perkins Loans can get them canceled if they teach special education, math, science foreign languages, bilingual education or teach at a low-income school.

To qualify, a person must teach at least one year and the loans are canceled in yearly increments until 100 percent is canceled after 5 years.

Using loan forgiveness programs

Grissom has been struggling for years to pay down her debt and is currently trying to qualify for the Public Service Loan Forgiveness program.

She had a variety of different types of loans and it wasn’t until she recently attended a Student Debt Clinic that she realized that her entire debt needed to be consolidated into federal direct loans.

The Consumer Financial Protection Bureau offers these tips on applying to various loan forgiveness programs:

  • Explore all your loan forgiveness options
  • Make sure you have the right type of loans that qualify
  • Enroll in a qualifying payment plan
  • Certify that you meet the eligibility requirements (public service, qualifying school or qualifying subject area)
  • Follow up with your loan servicer
  • Stay on track with payments and all requirements

Other resources available:

The Latest
Timothy Mapes was convicted of lying to a federal grand jury as part of an effort to thwart the feds’ probe into former House Speaker Michael Madigan.

“I certainly think the Illini have a better than 2% implied chance of winning it all, since 50-1 implies a 1.96% chance,” said Tyler Wyatt, a professional bettor in Nashville, Tennessee.
The win was Illinois’ eighth straight over Minnesota and kept the Illini in second place in the Big Ten, two games behind No. 2 Purdue (14-3) with three conference games remaining for both teams.
Nick Martinelli scored a career-high 27 points and the Wildcats (20-8, 11-6 Big Ten) reached 20 wins for only the sixth time in program history.