Loan Forgiveness Demonstration Program for Child Care Providers
NOTE: This demonstration program is subject to annual appropriations and is, therefore, not an entitlement to borrowers. Congress has appropriated no new funds for this program.
The 1998 Amendments to the Higher Education Act (HEA) authorized the Secretary of the U.S. Department of Education (ED) to establish a loan forgiveness demonstration program for borrowers who provide child care services in low-income communities (see HEA 428K). The purpose of the demonstration program is to encourage more highly trained individuals to enter and remain in the early child care profession.
The Loan Forgiveness Demonstration Program for Child Care Providers is limited to borrowers with federal student loans under the Federal Family Education Loan Program (FFELP) and the Federal Direct Loan Program (FDLP). The program provides for progressive loan forgiveness based on the years of completed full-time child care service performed (20% each year after the second and third years of service; 30% each year after the fourth and fifth years of service) up to 100% of a borrower’s loan.
Basic Eligibility Requirements
- Be a new borrower on/after October 1, 1998. That is, the borrower either —
- Had not borrowed FFELP or FDLP loans prior to October 1, 1998;
- Had borrowed prior to October 1, 1998, but had repaid all loans prior to October 1, 1998; or
- Had borrowed prior to October 1, 1998, and had repaid all loans after October 1, 1998, but before receiving new loans for which the discharge is requested.
- Have an associate or bachelor’s degree in early childhood education, child care, or any other educational area related to child care approved by the Secretary.
- Have been employed as a child care provider for the last 2 consecutive years in a child care facility, including a home-based facility, that is located in a low-income community and that is licensed or otherwise approved by the State or local government. For purposes of this program, a child care facility is serving a low-income community if at least 70 percent of the children receiving child care at the facility are from low-income families that earn less that 85% of the State median household income. Click here to view a table with information on median incomes for each state.
- Have received no National Community Service (Americorps) benefits for the same service.
Additional Program Requirements
- Loan forgiveness is available strictly on a first-come, first-served basis until funds run out. Priority is given to borrowers who received loan forgiveness in the preceding fiscal year. The department approves loan forgiveness commitments to borrowers before they are finalized by a FFELP guarantor or the FDLP servicer. ED staff also monitors the declining balance of appropriated funds throughout the fiscal year.
- ED disseminates information about the availability and benefits of the Child Care Providers Loan Forgiveness Demonstration Program to all potentially eligible borrowers. More information is available at www.ed.gov/offices/OSFAP/Students/familyincreq.pdf.
Section 428K of the HEA creates the loan forgiveness for child care providers program as a demonstration program. The Secretary has determined that the issuance of regulations to implement this loan forgiveness demonstration program is not necessary at this time. If Congress provides continued funding, however, ED will undertake negotiated rulemaking and will issue proposed regulations for public comment.
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