Teachers Can Have $17,500 Of Student Debt Cancelled. Fewer Than Half Who Qualify Apply
Co-Founder and Chief Data Scientist
Teachers who complete five consecutive years at qualifying low-income schools can have up to $17,500 of eligible federal student debt canceled, although Federal Student Aid reserves that amount for certain secondary math or science teachers and special education teachers. A 2024 Journal of Labor Economics study found that 46% of 2,917 Michigan respondents in the occupational group eligible for the higher benefit reported applying.
That 46% does not represent all fully eligible teachers nationwide because the group included teachers who had not necessarily completed five qualifying years. Among 4,610 study respondents who had accrued at least five years, 57% of the control group and 62% of those offered targeted information reported applying.
The Denominator Changes The Application Rate
The 2024 study examined two information campaigns conducted in 2015 and 2017, covering 44,362 Michigan teachers employed at eligible schools. Its follow-up surveys received 10,713 responses, a 24% response rate, so the detailed application figures describe respondents rather than everyone contacted.
Among those respondents, the same study found that three-quarters had federal student debt, leaving about one-quarter without debt that qualified for Teacher Loan Forgiveness despite working at eligible schools. Occupational eligibility alone therefore did not mean an application would produce a benefit.
The findings support substantial underuse and administrative friction in one state, rather than establishing that fewer than half of all fully eligible teachers nationwide apply. The percentage changes depending on whether the denominator includes teachers in qualifying jobs, borrowers with qualifying loans or those who have completed every service requirement.
The $17,500 Benefit Has Narrow Eligibility
Federal Student Aid’s current guidance limits the $17,500 benefit to qualifying secondary math or science teachers and special education teachers. Other eligible elementary and secondary teachers can receive no more than $5,000.
A borrower must generally teach full time at an eligible school or educational service agency for five complete, consecutive academic years, Federal Student Aid states. Eligible Direct Subsidized, Direct Unsubsidized and Stafford loans can qualify, while Direct PLUS, FFEL PLUS and Perkins loans do not qualify through this program.
Applications come only after the service period is complete. The Federal Student Aid application requires certification from a qualifying school’s chief administrative officer, while borrowers whose eligible loans have different holders must submit a separate application to each holder.
Targeted Information Raises Applications Modestly
The Michigan experiment gave teachers individualized information about school eligibility and progress toward the five-year requirement. Among respondents with five qualifying years, the 2024 study found that outreach raised the reported application rate by 5 percentage points from the control group’s 57% base.
Receipt increased less. The study reported that 38% of the control group with at least five qualifying years received forgiveness, compared with 40% of the treatment group, a statistically significant increase of 2 percentage points.
Although outreach improved understanding, neither the randomized campaign nor the study’s separate analysis of schools near Michigan’s eligibility threshold produced a detectable improvement in teacher retention. Qualitative evidence came from two 2016 focus groups involving eight Michigan teachers and telephone inquiries with 10 student-loan-servicer representatives; teachers described distrust and confusion, while researchers found substantial variation in representatives’ program knowledge.
National Totals Do Not Reveal An Application Rate
A 2015 Government Accountability Office review estimated that 0.8% of the potentially eligible population participated in Stafford Teacher Loan Forgiveness during the decade examined. GAO cited limited awareness as a major challenge, although its measure covered participation rather than applications and predated the Michigan experiment.
The Education Department’s fiscal 2027 budget materials report that 13,700 borrowers received Teacher Loan Forgiveness in fiscal 2025, compared with 16,900 in fiscal 2024 and 12,600 in fiscal 2023. The department’s fiscal 2025 target was 25,000 recipients.
Those totals count successful recipients, without identifying the eligible population, submitted applications or denied claims. They show limited annual use while leaving the national application rate unresolved.
The Best Forgiveness Route Depends On The Balance
Federal Student Aid says Public Service Loan Forgiveness can cancel a qualifying borrower’s remaining Direct Loan balance after 120 qualifying monthly payments, a minimum of 10 years. Teacher Loan Forgiveness instead provides a capped benefit after five qualifying academic years.
The same teaching service cannot generate benefits under both programs, Federal Student Aid states. For teachers with larger balances, using five years for a benefit capped at $17,500 can therefore be less valuable than preserving those years for a program capable of canceling the remaining balance.
A teacher comparing the programs should consider loan type, completed service, documentation and outstanding balance before assigning those years to either path. The 46% figure signals underuse within one Michigan group, but the practical decision turns on full eligibility and which program makes those years of public service more valuable.
