Forgive Teachers’ Student Loans? First Find Out If It Works

Teacher pay ranks among the most contentious education issues for policy leaders and the public. Whether low salaries dissuade talented prospects from entering the profession or whether teachers settle for low salaries because they love their students is hotly contested, as is the question of whether performance-based pay policies are viable in education. But a far less controversial issue about teachers and money also deserves public scrutiny: teacher loan forgiveness.

On July 30, the Teacher Loan Repayment Act was introduced in the Senate and House to consolidate current loan repayment programs and give teachers in high-needs schools between $250 and $400 a month in payments to their lenders. According to Sen. Mark Warner (D-Virginia), sponsor of this bipartisan-supported legislation, the act will “incentivize talented teachers to enter and remain in the hardest-to-staff classrooms.”

But little is known about the effectiveness of loan forgiveness as a strategy for attracting and retaining the best teachers in our neediest schools. In fact, seminal survey research on why top college students don’t enter the profession or why teachers leave doesn’t even mention loan forgiveness. While the measure may seem like a policy substitute for teacher salary increases, the jury’s out on whether it is equally effective for addressing immediate recruitment and retention needs or longer-term goals for elevating the teaching profession’s status and appeal to the next generation of talent.

A few studies have addressed the issue. In general, they suggest that teacher loan forgiveness and scholarships may improve teacher recruitment and even retention, but cast doubt on whether this is the case in high-needs or low-performing schools where effective teachers are most needed. And no studies confirm that such programs attract to the profession talented individuals with many career options who might otherwise have selected a different path. These individuals head to the business, legal, and other sectors with the promise of attractive salaries, not meager loan repayment programs.

So why is loan forgiveness for teachers so much more appealing than raising teachers’ salaries so they can pay off their own loans?

Is the low cost the answer? It’s possible. The proposed Teacher Loan Repayment Act caps loan forgiveness at $23,400 per teacher. Salary raises over the years can amount to many times that number—and affect pensions. Perhaps it’s because the federal government foots a large part of the loan forgiveness bill? Or maybe it’s simply easier to coordinate a single federal program than to affect what happens around local bargaining tables in thousands of districts across the country?

Regardless of the reasons, state policymakers are getting on board. In June, each state had to submit a plan to the U.S. Department of Education to ensure high quality teachers in every classroom. Asked to determine the root causes of the gaps in access to effective teachers that shortchange poor and minority students, states also had to develop strategies to address those root causes. When teacher salaries were identified as the problem, teacher loan forgiveness was identified as the solution.

  • In Illinois, a root cause of the state’s equity gaps was the “lack of an equitable funding formula for local school districts, which results in disparities in teacher salaries between districts.” The strategy for addressing this was not to address disparities in teacher salaries but to “utilize current state communication strategies to ensure that teacher candidates and practicing teachers are aware of federal loan forgiveness programming.”
  • Montana explained the root cause of teacher inequity this way: “Pay, benefits, working conditions, and cultural issues contribute to the challenges of recruiting, hiring, and retaining high quality secondary school teachers. Larger districts have better compensation and benefit packages. …Often ‘good teachers’ move on because they are qualified enough to teach at larger, better paying schools.” Only one of the state’s 14 solutions for these shortcomings dealt with teacher incentives, and that one involved expanding eligibility for student loan forgiveness.
  • Michigan listed 82 barriers that prevent having great teachers in all the state’s classrooms. Among them: “salary differences between high and low poverty districts,” “a back-loaded compensation model,” and “an inability to reward teachers for things that really do matter.” Of seven proposed strategies to lower these barriers, none addressed salaries, and one promised to “increase awareness of [the] teacher loan forgiveness program … based on the theory that potential and practicing teachers are not aware of this program.”

The Michigan equitable access plan does point out the lack of research on the effectiveness of teacher loan forgiveness and includes a plan to support that research.

Though perhaps easier and less costly than addressing teacher pay, loan forgiveness is still a highly complex and costly program if it is not going to address our shortages of effective teachers. Fortunately, today the burgeoning teacher voice fellowships (e.g., Hope Street Group, America Achieves, Teach Plus, etc.), teacher associations, the Teacher Salary Project, the newly rebranded Educators Rising (formerly the Future Educators’ Association), and the federal equitable access planning process are all sparking conversations with teachers and other stakeholders about ways to grapple with the question of what will work—loan forgiveness, higher pay, both, or neither—to retain excellent teachers and attract the next generation of teacher talent to the profession.

Financial incentives of any kind are only one part of the equation for recruiting and retaining great teachers for all, but when it comes to deciding between loan forgiveness and salaries, let’s first find out what works.

Ellen Sherratt is a senior researcher at AIR specializing in teacher compensation, strategic recruitment and retention, and teacher voice. She is the co-deputy director of the Center on Great Teachers and Leaders and President of the Board of the Teacher Salary Project.