By Tamara Hiler
The average teacher coming out of school with a master’s degree in education today owes approximately $50,000 in student loan debt. To put that in perspective, that’s $8,000 more than the average debt for a candidate with a newly-minted MBA. Yet the average salary for this same master’s degree-holding teacher within their first five years of their career is less than $46,000.
Yes, that’s correct. A beginning teacher often has more debt than what one year’s salary will bring in.
Trust me, I should know. As the wife of a teacher who just wrapped up his sixth year in the classroom, the reality of this unfortunate debt-to-income ratio hits close to home.
In an attempt to correct this imbalance and attract talented graduates into the profession, the federal government offers teachers myriad loan forgiveness and grant options. From Stafford Loan Forgiveness and TEACH Grants designed to alleviate loan burdens for teachers after five years, to Public Service Loan Forgiveness (PSLF) that’s available to forgive the remaining debt of any full-time public service employee for ten years, there’s no shortage of options for teachers looking to find much-needed financial relief for choosing to pursue a career as noble as educating kids.
More than 8-in-10 teachers fail to take advantage of the loan forgiveness options they are rightfully allowed to claim each year.
Despite these options — which are all promising on paper — there is in fact a shortage of teachers actually using them. A 2015 report from the Government Accountability Office estimates that “0.8% and 19% of the potentially eligible teaching population participates in the Stafford Teacher Loan Forgiveness and TEACH Grant programs, respectively.” That means more than 8-in-10 teachers fail to take advantage of the loan forgiveness options they are rightfully allowed to claim each year.
The reason for these abysmally low participation rates is in large part because — as I wrote about in a report back in 2014 — the current patchwork of programs are overly-complicated, backloaded, conflicting, and sometimes even detrimental to the long-term finances of teachers who apply for them. And as Jason Delisle and Alexander Holt just outlined, the “competing sets of rules that affect borrowers” across these programs can make it impossible for teachers to navigate which program is actually right for them at the right time.
Making teachers jump through multiple hoops and wait years down the line for the promise of any sort loan forgiveness also does little to incentivize or retain high-achieving talent from seeking financial relief in a different profession altogether.
Even my husband and I find his current attempt to work towards PSLF to be quite the onerous and perplexing task — and I work in higher education public policy full-time. It requires the constant maintenance of signatures and repayment plan reassurances by his loan servicer, making it unclear if this forgiveness will actually pan out when he finally crosses that ten year finish line.
Even my husband and I find his current attempt to work towards PSLF to be quite the onerous and perplexing task — and I work in higher education public policy full-time.
Luckily, a new bipartisan bill re-introduced earlier this month from Senators Orrin Hatch (R-UT) and Mark Warner (D-VA) and Representatives Derek Kilmer (D-WA) and Susan Brooks (R-IN) would get rid of the morass of loan forgiveness options available to teachers and instead streamline them into one, upfront program that would put anywhere from $250-$400 towards every eligible teacher’s loan payment each month up to a total of $23,400.
Known as the Teacher Loan Repayment Act (TELORA), teachers would no longer have to struggle to make ends meet for the years it takes to have their loan relief kick in, but instead see a reduction in their debt from day one in the classroom. And, unlike the current programs, all loan payments made under TELORA would also count towards PSLF, which means teachers could continue to see full loan cancellation after serving in the classroom for ten years.
As teachers head into summer break, the last thing on their minds should be figuring out how they’re going to pay their student loan bills each month. Having a user-friendly loan option like TELORA would allow them to reasonably manage their debt and provide a strong incentive to stay in the classroom longer term. It’s clear that most teachers don’t go into the profession because of the lucrative payout, but this new bill is one way that we can show teachers we value the priceless contributions they make to our society year after year.
Tamara Hiler is a senior policy advisor and higher education campaign manager at Third Way.