January 20, 2005

9:16 AM

DebtForgivenessFilter: I'm currently student teaching and expect to get my licensure in May or June, and a job shortly thereafter. Problem is, over my educational career, I've managed to accumulate a not-insubstantial amount in student loans. I'd like to see them lessened to vanish entirely. [+mi]
posted by absalom to (8 comments total)

[more:] I'm going to be certified for grades 7-12 in non-critical needs areas: History, Government, and English. (Well, English is sometimes critical need, but also the thing I want to do the least) State is Tennessee, city is Memphis, and moving somewhere else isn't really an option. So, I guess that makes me mostly interested in federal programs, though if Tennessee actually does have something like this, I'm more than happy to take advantage of it.
posted by absalom at 9:20 AM on January 20, 2005

Things to ease your pain, but not completely vanquish the debt: Interest paid on Student Loans is tax deductible, up to a point. This is helpful as it gives you a chance, every Feb, to catch up to your bills.

However, there is a maximum on it ..I encountered it once. There is no maximum on tax deductible interest on real estate loans, however. This means that if you own your own house, you can take out an equity loan -- assuming you have equity -- and roll your student loans into that. Therefore, all interest paid on that loan is 100% deductible, and I've yet to hit a limit on that.

Other advice: Sit down with your bills and figure out where you're paying the most interest. Standard culprits are small-bank credit cards and department store credit cards. If you can't pay them off, consider the above solution as well -- equity loan -- as you'll be paying less interest, and it'll now be tax deductible.

Of course, I am not a financial advisor -- just another lost soul in the great debt universe.
posted by thanotopsis at 9:37 AM on January 20, 2005

Here's what I found here:
It is possible to have 100 per-cent of a loan canceled for teaching service. For example, if a teacher has a loan balance, including accrued interest, of $40,000, after one year of teaching in a low-income area, $6,000 would be canceled, leaving a balance of $34,000.

The following year, the canceled amount would be 15 percent of the $34,000 plus the year’s accrued interest (say $35,020), leaving a balance of $29,767. The third year, 20 percent of the loan plus accrued interest is canceled and so on. Depending on the original loan amount, it is possible to have 100 percent of the loan forgiven through this program.

And more info here.
posted by Floydd at 9:52 AM on January 20, 2005

Floydd has just produced the most useful answer I have yet to see on AskMe.
posted by caddis at 11:59 AM on January 20, 2005

I was looking at that website - it's also worth looking at whether loan forgiveness covers private loans. I did AmeriCorps a while back, and learned to my dismay that I could not defer my higher interest private loans or apply my AmeriCorps education award to them. Many progs only apply to federal loans, not private ones students have taken out. Make sure to check!
posted by jare2003 at 12:59 PM on January 20, 2005

Holy cow, Floydd! Nice!
posted by Civil_Disobedient at 1:33 PM on January 20, 2005

Floydd: you rock my world.
posted by absalom at 7:36 PM on January 20, 2005

Aww, shucks.
Twernt nothin'....
(I researched this for my ex about 5-6 years ago, she's still teaching in South-Central LA and absolutely loves it.)
posted by Floydd at 8:34 AM on January 21, 2005