In my first lesson of the day, I asked my students, or rather their avatars, a question on our online classroom screen. I waited for a response but received silence. Since none of my students turned on their cameras, I couldn’t figure out why I hadn’t received a response, but some were probably on the phone or in bed. I started to cry at the uselessness, and for a profession that I no longer recognized.
Today, I am one of hundreds of thousands of public school teachers who have walked out of school since the pandemic began, according to the US Bureau of Labor Statistics. In doing so, I lost the loan cancellation promise I was counting on. My balance of almost $50,000 will have to be paid back in full.
Still, I know I made the best decision for me and my family. I was deeply unhappy and dissatisfied.
“If someone had the opportunity to dramatically improve their financial situation and job satisfaction, I certainly couldn’t fault them for going ahead and putting forgiveness in the rearview mirror,” says Barry Coleman, executive at the National Foundation for Credit Counselling.
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Here are the factors I considered and the steps I took to protect my family’s financial health.
Check your progress towards loan forgiveness
Borrowers typically must make 120 payments on time while working full-time for an eligible employer before they can apply for Public Service Loan Forgiveness, or PSLF.
As I contemplated leaving education, I wanted to see how close I was to full forgiveness. According to my FedLoan account, I was 64 to 74 payments short, depending on the loan. (MOHELA, the new loan servicer taking over the wallet previously owned by FedLoan Servicing, has similar payment tracking on its website.)
If you’re closer to loan forgiveness, it may be worth delaying a career change. A few comments :
- Borrowers will receive credit for the months they went without making payments during the current federal student loan payment pause due to the pandemic. They will still have to certify their employment during this period.
- There is a waiver in effect for the cancellation of civil service loans which may include previously ineligible payments in the required total. You must submit a combined PSLF/employment certification form by October 31, 2022, for review.
- Teachers who serve low-income schools for five consecutive years are eligible for loan forgiveness for federal loans up to $17,500. This program, Teacher Loan Forgiveness, is separate from the PSLF.
Seek better compensation
With the cancellation of civil service loans on the table, I needed a repayment plan. First, I had to find a better paying job, which luckily happened quickly.
“Depending on the career you’re headed for and the new salary, the loan balance can be recouped quickly,” says Jillian Lucas, founder of JML Career Coaching.
But there’s more to consider than the bottom line.
Teacher compensation is unique in several ways. Since many teachers don’t work in 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.
Additionally, public school teachers in many states are entitled to a traditional pension, an increasingly rare benefit. If you haven’t been in education long enough to qualify, then finding a job that offers a 401(k) match may be a priority.
Also consider bonuses, allowances, equity and insurance premiums when considering new jobs. How does that compare to what you give up as a teacher?
Let the payback begin
When loan forgiveness is no longer an option, you will need to determine a new debt repayment date. Online calculators can help.
Next, determine 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 loan relief due to a career change, you don’t need to be tied to a particular plan. Also, remember that federal borrowers will be able to sign up for a new income-oriented repayment plan this will make loan repayment more manageable by not charging interest on the loan balance as long as you make your monthly payments, among other reforms.
There are also ways to speed up your payment date. You could send “extra” money, such as tax refunds, to pay off your debts. Be sure to tell your loan servicer to apply any additional payments to your current balance rather than counting them towards next month’s payment.
Or try it bi-weekly payment method. Let’s say your monthly loan payment is $500. Instead of paying $500 per month, you’ll pay $250 every two weeks. At the end of the year, you will have made the equivalent of an additional month’s payment.
Forgiveness or happiness?
When I left teaching, I had only 13 months of qualifying employment before partial loan forgiveness. I had already taken 12 years; can’t I make one more?
I’m not an impulsive or financially irresponsible person, but I had fallen in love with my work. Who was this teacher I had become, and what would I look like as a teacher, mother and wife after another year in this career? My sanity and my family’s balance would suffer deeply, and nothing – not even thousands of dollars in loan forgiveness – is worth that.
“Everyone deserves a job they love,” says Lucas. “And money won’t get you far if you hate what you do.”
This article was written by NerdWallet and was originally published by The Associated Press.