If you’re a school-based OT, it’s pretty likely that you have student loans. Luckily for us working in the school system, there are multiple opportunities to get this debt forgiven. If you’re curious if student loan forgiveness is the right choice for you, consider the following options.
Note: This article was written in December 2022, during a time when student loan forgiveness programs are rapidly changing. If you’re interested in one of these options, be sure to verify the current rules and qualifications of the program.
School-Based OTs may be Eligible for $10,000 – $20,000 of Student Loan Forgiveness
At the time of writing this in late 2022, a huge new student loan relief program is in the midst of being implemented. This program is actually available for all types of borrowers, not just school-based OTs, but we’re starting with it as it is likely the most significant amount of relief available, so far. The tenets of this program are simple. Every borrower with an individual income of less than $125,000 or a household income of less than $250,000 is eligible for $10,000 of one-time federal student loan forgiveness. If you received Pell Grants in college, that number goes up to $20,000.
This program is set to provide major relief to millions of borrowers, but unfortunately, is currently on hold due to challenges in the courts. I feel very confident that this program will eventually come to fruition, and that we’ll actually see even more student loan forgiveness in our lifetimes. But for now, if you didn’t already apply for this program while applications were open earlier in 2022, you’ll have to wait until the court cases take place to apply again. If you’d like to be notified about updates on this program, you can do so here.
The good news is that the student loan payment pause has been extended yet again, and the government has indicated it will remain paused until the Department of Ed can implement the debt relief program, or the litigation is resolved. Tentatively, the department has stated that payments will resume 60 days after June 30, 2023, but I think that it’s unlikely payments will resume before this program is implemented.
So, if you currently have student loans, you are almost assuredly best off if you take advantage of this pause and stop your payments for now. This is because during the payment pause, no interest is accumulating on your loans. If you’d like to be extra-safe, it’s a great idea to take the money you would have paid and keep it in a High-Yield Savings Account (HYSA). When payments resume, you can still choose to use this money toward your existing student loans, and you’ll have earned some extra interest, to boot.
School-Based OTs may be Eligible for Public Service Loan Forgiveness (PSLF)
Because public schools are nonprofit or government organizations, working in one may qualify you for Public Service Loan Forgiveness (PSLF). PSLF requires that you work full-time for 10 years in a government agency or non-profit and make on-time student loan payments. If you do this, you’ll have the entirety of your federal debt forgiven. And PSLF allows you to do income-driven repayment plans, which means that your monthly payments will likely be more reasonable.
The PSLF program has undergone changes during the pandemic, and has made some recent improvements. Before this, PSLF was notoriously hard to qualify for, with only 1% of over 29,000 applications being approved in its first year. This year, the government released a waiver that made it much easier to qualify for PSLF. This waiver also allowed borrowers who had not yet worked for 10 years to apply for the program to be preemptively approved. That waiver expired in October 2022, but it should still be much easier for qualifying borrowers to get approved for PSLF. Keep an eye on this page if you think this might be a good option for you.
PSLF has some drawbacks. Only federal, direct loans are eligible for this program. So if you mostly have other types of loans, this program may not be very useful for you. Since you’re required to make 10 years of payments, some borrowers may end up paying off most of all of their loans before they’re eligible for forgiveness. Something else to keep in mind is that the pay for school employees in some states is abysmal. If you’re in one of those low-paying states, you may actually be better off working in a higher-paying job that doesn’t qualify for PSLF. And lastly, as PSLF requires you to be employed directly by a non-profit, contract therapists are usually unable to qualify, even if they’ve been doing the exact same job as their district-hired counterparts.
Still, even with the drawbacks, this program is shaping up to be one of the best loan forgiveness options for OTs working in the school system. I’m hoping we’ll continue to see improvements with this program, including finding a way to credit therapists who are contracted to school districts instead of working for them directly.
School-Based OTs may be Eligible for Teacher Loan Forgiveness
Another program that should be on school-based OTs’ radar is the teacher loan forgiveness program. And yes, I know, we spend so much time advocating for our role in the school system – we’re not actually teachers. But for this program, OTs have been able to qualify for up to $17,500 in loan forgiveness by working under the following designation for five years in a low-income school or educational service agency:
“a highly qualified special education teacher (at either the elementary or secondary level) whose primary responsibility was to provide special education to children with disabilities, and you taught children with disabilities that corresponded to your area of special education training and demonstrated knowledge and teaching skills in the content areas of the curriculum that you taught.”
So, if you’re willing to bite your tongue and accept that the government is just using a more generic term for our role here, this program can be a good fit.
One important thing to note about the teacher loan forgiveness program is that it does not intersect with PSFL. You can do both programs, but the periods of time (5 years for teachers, 10 years for PSLF) cannot overlap. So, if you would qualify for both programs, it’s a good idea to crunch the numbers and see if one would be a better fit, or if doing both for a total of 15 years makes sense.
One other, slightly different program to look into is the Perkins Loan Teacher Cancellation. This program allows teachers and related employees to discharge up to 100% of their Perkins loan by working in a school for five years. This option actually calls out occupational therapists specifically, so if you have this type of loan, it’s definitely worth looking into.
There are Other, Rare Loan Forgiveness Scenarios School-Based OTs May Qualify for
There are a few other situations where you may not have to pay your student loans. For example, if your school closed shortly after you left, your federal student loan may be discharged. Or, if you’ve become totally and permanently disabled, it’s possible to have all of your student loans forgiven. And worst-case scenario, if you die, your federal student loans die with you, so your survivors won’t have to worry about paying them.
For more info on these options and other rare situations, click here.
If your head is spinning, you’re not alone! Finding the best option to manage your student loans can be incredibly confusing and complicated. Still, I hope this article shed some light on the current programs that best fit school-based OTs. One last thing to keep in mind is that with any loan forgiveness situation, there are potential tax implications. It’s a good idea to consult an accountant if you’ll be applying for one of these programs.
If you’re looking for even more support with school-based OT, come join us in The Dynamic School OT Course. This is a super-comprehensive CEU course that goes beyond intervention into all of the aspects of our role, including work-life balance, time management, and navigating challenging situations.