This Act enhances benefits for public school teachers by establishing full federal undergraduate loan forgiveness after eight years of service, providing a deferment period where interest does not accrue during teaching, and authorizing necessary tax information sharing for verification.
Cleo Fields
Representative
LA-6
The Teacher Loan Forgiveness Enhancement Act establishes a new program allowing public school teachers to receive full federal undergraduate loan forgiveness after eight years of continuous service. This legislation also grants teachers a deferment period for loan payments, during which interest will not accrue while they are actively teaching. Furthermore, the bill permits the Treasury Department to share necessary tax information with the Department of Education to verify eligibility for these teacher loan forgiveness programs.
New Bill Offers Full Undergraduate Loan Forgiveness After 8 Years of Public School Teaching
The Teacher Loan Forgiveness Enhancement Act is a major proposed overhaul of how the federal government supports public school educators who carry student loan debt. The core of the bill is simple: if you work full-time as a teacher in a public elementary or secondary school for eight consecutive years, the entire remaining balance of your federal undergraduate student loans—principal and accrued interest—gets wiped out (SEC. 2).
The 8-Year Full Forgiveness Plan
This isn't just a slight increase to an existing program; it creates a brand new, powerful incentive. Crucially, the bill specifies that this forgiveness is tax-free. Typically, when debt is forgiven, the IRS treats that canceled amount as taxable income, which can hit borrowers with a massive surprise bill. This new act explicitly removes that tax bomb, meaning teachers get the full financial benefit without the federal tax penalty (SEC. 2).
What makes this particularly appealing is that you can stack this new benefit with other existing forgiveness programs. So, if you qualify for Public Service Loan Forgiveness (PSLF) or other teacher-specific benefits, you can still utilize them alongside this new eight-year track (SEC. 2). This flexibility acknowledges that many teachers have a mix of loan types and service commitments, providing multiple pathways to debt relief.
Payments on Pause: The Interest-Free Deferment
Beyond the forgiveness track, the bill gives immediate relief to teachers currently making payments. It creates a new, interest-free deferment period for federal student loans while a borrower is actively teaching in a public school. This means you can pause your principal payments, and better yet, the interest clock stops running (SEC. 3).
This deferment applies across the board—Direct Loans, older FFEL Program loans, and Perkins Loans—ensuring no teacher is left out based on when they took out their debt. This benefit lasts for the duration of your teaching service plus an extra six months immediately afterward. For a teacher in their early career, this means years of reduced financial pressure and thousands saved in interest while they work toward that full forgiveness milestone.
The Administrative Fine Print
To make this program run smoothly, the bill includes a provision that allows the Secretary of the Treasury to share specific, limited tax return information with the Department of Education (SEC. 4). This isn't a free-for-all data dump; it’s strictly limited to verifying eligibility for the teacher loan forgiveness program. They can share things like your Employer Identification Number (EIN), employer name, and confirmation of employment for a given tax year. While data sharing always raises eyebrows, this measure is necessary to cut down on bureaucratic delays and confirm that applicants actually meet the eight-year public school teaching requirement efficiently.