Individuals considering alternative routes to teacher certification may be eligible for Federal Pell Grants, Federal Perkins Loans and/or Stafford Loans under the Federal Family Education Loan (FFEL) or Direct Loan Programs. The loans may be the most beneficial for those who plan to teach in high need schools or in subject areas where there is a demonstrated need for teachers because the repayment obligation can be cancelled if certain requirements are met.

Individuals enrolled in an alternative route to certification program may be eligible for a Federal Pell Grant. Pell Grants are available to undergraduate students with financial need; however, the amended 1998 Higher Education Act allows certain students who have earned a bachelor's degree to receive a Pell Grant when enrolled in a post-baccalaureate teacher certification or licensing program. While this opportunity is best designed for candidates enrolled in "fifth year" certification programs, like the ones that are the norm in California, there may be some alternate route candidates around the nation who can also take advantage of it. The maximum amount of the award in 2004-2005 is $4,050.

A student who meets the above criteria is eligible to receive a Pell Grant for the period of time necessary to complete the program only if:

• The student meets financial eligibility requirements, which depends on his or her Expected Family Contribution (EFC) and cost of attendance;
• The program consists of the courses required by a state to receive a professional certification or licensing credential necessary for employment as a teacher in an elementary or secondary school in that state;
• The program is offered by an accredited institution of higher education or an accredited postsecondary vocational education institution;
• The program does not lead to a graduate degree;
• The school offering the program does not also offer a bachelor's degree in education;
• The student is pursing an initial teacher certification or licensing credential within a state;
• The program is a post-baccalaureate program; and
• The student is enrolled at least half-time (generally considered to be at least six credit hours).

Under this provision, a post-baccalaureate program is defined as a program that generally requires a student to have a bachelor's degree before being admitted to the program. Accordingly, a program in which undergraduate students are routinely allowed to enroll would not meet the definition of a post-baccalaureate program for this purpose², nor would a program that is generally open to undergraduates but that also admits students with bachelor's degrees.

A Federal Perkins Loan is a low-interest loan available to undergraduate and graduate students who demonstrate "exceptional financial need" as defined by the school, using procedures it establishes for that purpose. The Perkins Loan Program is a campus-based program, so-called because individual schools administer the program and disburse loan funds. In order to receive a Perkins Loan, an alternative route student must attend an institution that participates in the program and be enrolled or accepted for enrollment, on at least half-time basis, in a program that is required by a state for a professional credential or certificate for employment as an elementary or secondary teacher in that state. A student enrolled in a teacher certification program may be considered either an undergraduate or graduate student, depending on the school's policy. That decision is left to the school.

Loan Forgiveness

Individuals receiving Perkins Loans who serve full-time in a public or non-profit elementary or secondary school system may qualify to have those loans cancelled if they work as:

• A teacher in a school serving low-income students; or
• A special-education teacher, including teachers of infants, toddlers, children, or youth with disabilities; or
• A teacher in the fields of mathematics, science, foreign languages, or bilingual education, or in any other field of expertise determined by a state education agency to have a shortage of qualified teachers in that state.³

Currently, up to 100 percent of the loan may be canceled for qualifying teaching service, including any interest that may have accrued, in the following increments:

• 15 percent canceled per year for each of the first and second years of service,
• 20 percent canceled for each of the third and fourth years, and
• 30 percent canceled for the fifth year.

A student with a baccalaureate degree who is taking coursework necessary for a credential or teacher certification at the elementary or secondary level may apply for a Stafford Loan. These loans are either subsidized (based on financial need) or unsubsidized (eligibility not based on financial need). The school's records must indicate that the courses taken are required by the state where the student will be teaching. The annual loan limits are $5,500 in subsidized Stafford Loans and $5,000 additional in unsubsidized Stafford Loans. The loan limit is not prorated if the program is less than an academic year.

Loan Cancellation

Cancellation for teachers applies to Stafford Loans made to "new borrowers" on or after October 1, 1998, and to the portions of a Consolidation Loan derived from these loans. You may be eligible to have up to $5,000 of your Stafford Loans canceled if you are teaching in a qualifying school that serves low-income families and you are a new borrower. A new borrower is one who had no outstanding FFEL or Direct Loan balance on October 1, 1998 or who has no outstanding loan balance on the date he or she obtains a loan after October 1, 1998.

To qualify, a teacher must work full-time for five consecutive years in an elementary or secondary school that serves low-income families and meets certain other conditions. Additional conditions:

• At least one of the five qualifying years of teaching must occur after the 1997-98 academic year.
• The loan must have been made before the end of the fifth year of qualifying teaching.
• The elementary or secondary school must be public or private nonprofit.
• A defaulted loan cannot be cancelled for teacher service unless you've made satisfactory repayment arrangements with the holder of the loan.
• A borrower may not receive loan forgiveness for qualifying teaching service if the borrower receives an Americorps benefit for the same teaching service.⁵
• A borrower who is an elementary school teacher must demonstrate knowledge and teaching skills in the elementary school curriculum as certified by the principal or other chief administrative officer of the school.
• A borrower who is employed as a secondary school teacher must teach in a subject area relevant to the borrower's academic major as certified by the principal or other chief administrative officer of the school.

To qualify, the teacher must provide direct classroom teaching or classroom type teaching in a non-classroom setting.

¹ FSA Handbook (Vol. 3 - Pell Grants, 2003-2004; Chapter 2, Page 8-10), PDF (638K).

² Funding Your Education.

³ Student Aid on the Web - Perkins Loan Cancellation.

⁴ FSA Handbook (Vol. 8 - Direct Loan FFEL Programs, 2003-2004; Chapter 1, Page 3-4).

⁵ FSA Student Aid on the Web: Stafford Loan Teacher Cancellation (2004)