Federal

Report: Financial Aid Programs for Teachers Falling Short

By Stephen Sawchuk — September 22, 2014 2 min read
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Too few prospective teachers are using—or are even aware of—federal loan-forgiveness programs that could ease the financial burden of teacher preparation, a recent report from the centrist think tank Third Way contends.

The report says that the current service requirements included in such programs are outdated and not in alignment with current demographics of the workforce. “The available loan forgiveness options are rendered essentially moot for almost half of today’s highly mobile Millenial workforce—and perhaps for many others who do not feel they can make a four, five, or 10-year commitment to a job mere months after graduation,” the report states.

The report, released earlier this month, outlines the major federal-aid programs for teachers, and concludes that they generally fall short of intended aims. To wit:


  • Federal data indicate that only 32 percent of incoming and current teachers even knew about the existing programs, and only 65,000 teachers used the federal loan-assistance programs in 2013, the authors noted. Yet an estimated two-thirds of teachers borrow in order to pay for their preparation.
  • Most of the current loan-foregiveness programs have complicated service-eligibility requirements—from four to 10 years teaching in a high-need subject and/or school—and only pay out after that commitment, meaning teachers have to seek out all the paperwork to receive a back payment.
  • The report also criticizes the TEACH grant program because students who don’t meet all the service requirements have their grants convert to a federal direct unsubsidized loans, which carry potentially higher interest rates than under regular subsidized student-aid programs. In fact, the U.S. Department of Education has estimated that upwards of 75 percent of TEACH grants ultimately do convert in this way.
  • The programs’ set-ups even require teachers to make Faustian choices, because service in fulfillment of one loan program generally can’t double towards another with a longer timeline.

The solution, the report suggests, is giving teachers month-to-month stipends in the form of loan forgiveness, much as congressional staffers receive today for their public service. And teachers should be allowed to participate in several different kinds of loan-forgiveness programs.

The idea of axing up-front service commitments, however, could be controversial for some advocates who believe that such a commitment helps prevent short-termers from entering the profession.

I’d love to hear from student-loan officers and others who work in this complicated area of policymaking on what they think of the recommendations in this report. Comments section is open!

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A version of this news article first appeared in the Teacher Beat blog.