On Student Loans, Teacher Loan Forgiveness, and Free Teacher Education

Student-Loans-5By Nick McDaniels — If this post comes off as self-interested, that’s because it is.

I, like many American teachers in their twenties and thirties, have student loans to repay.  I, like the same American teachers, hope they are repaid before I must begin paying for my daughter to go to school.

Teachers, in the past and today, including I, have found some relief from student loans through repayment and forgiveness programs specifically designed to reduce the burden of loans on teachers teaching in low-income schools.   However, these programs have become harder and harder to take advantage of as more and more teachers are receiving loans which make them ineligible for forgiveness or repayment programs, or are faced with the prospect of teaching and paying on loans for 120 consecutive monthly payments before a forgiveness opportunity kicks in.

The economics of this for me means I likely gain just as much benefit from paying these loans off as quickly as possible rather than waiting for potential repayment incentives which might even match the interest I’ll pay over the amount of time waiting for the incentives to kick in.

If this is the case for me, as it must be for some others, then our incentive program is not that much of an incentive at all and should be overhauled.  If we are considering an overhaul, we must consider a few things, and we’ll pretend that it is not an option to make college education free to all Americans:

1) Is teaching a career that we want to incentivise with student loan forgiveness programs?

I think when comparing the balance of social importance of teachers with the relative low pay, making teacher training costs less of a long term encumbrance on teachers is likely a good thing.

2) If we want to incentivise teaching as a career choice, then how can we do so through student loan programs?

I think the answer here is simplicity.  If a program is devised that allows 18 year old future teachers to enroll in a program that will guarantee them if they teach in a certain type of school until they are 28 years old or 32 years old and the entirety of their student loan balance will be repaid, no matter how much they have paid, no matter how much they owe, no matter what type of loans they have, then we have created an incentive where the choice is much clearer for the soon to be teachers.  In other words, the closer we can get to a “you agree to teach, you go to school for free” program, the more impact it will have as an incentive.

3) If we want a simplified method of years-of-service/location-of-service oriented teacher loan repayment, how would that system dovetail with the current system we know?

The answer is likely to create a separate class of student loans designed specifically for future teachers.  These loans would then have to be easily transitioned into other types of loans in the event that the person receiving the loans became no longer eligible under term of repayment.   Having a separate, profession-specific track of student loans would give policy makers the freedom to determine the value of having good teachers relative to the value of having those same teachers encumbered with student loans.  This could open the possibility of having more profession-specific tracks of student loans to incentivise the building of certain professions.

In the arena of trying to convince young, bright people to become teachers, creating financial incentives is part of the process and a serious look at the seemingly ineffective teacher incentives provided by the current student loan scheme is necessary.

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