For educators, the student debt burden is especially cruel.
Teachers typically earn a bachelor’s degree and teacher certification to enter the classroom, and in some states, they must earn a master’s degree within a few years to continue their careers. Some ESPs are also required to earn college degrees and certification, or they must undergo training in their specific field of work.
To get this postsecondary education, more than half of teachers (53 percent) and more than a quarter of ESPs (29 percent) have taken out student loans. Among those who took out loans, more than a quarter of teachers and ESPs took out at least $65,000, with younger educators and educators of color more likely to have higher levels of debt than their peers.
This debt has had a variety of negative consequences for educators. In a 2020 survey, the NEA found that
- Educators who were currently holding student loan debt were more likely to report difficulties building up emergency savings and maintaining their own well-being.
- They were also more likely to have difficulties paying for basic needs, such as food, housing, and medical care.
Some educators are still paying off their student debt as they take out loans for their children’s education or in their retirement.
Student debt relief and forgiveness solutions that can help recruit and retain educators include:
Enact Broad-Based, Federal Student Debt Cancellation for Borrowers
The Biden administration’s proposal to cancel $10,000 of loan debt for low- and middle-income borrowers, with an additional $10,000 canceled for Pell Grant recipients, is a promising first step. [Note: In November, this program was paused by federal courts.] However, cancelling $50,000 of student loan debt would fully remove the burden from more than half of the educators currently carrying it and substantially reduce it for the remainder. While current policy efforts focus on federal student loans, these need to be expanded to include private loans, which account for more than 7 percent of student debt.
Support Educators’ Applications for the PSLF Waiver
In October 2021, the U.S. Department of Education announced a major overhaul to the failing Public Service Loan Forgiveness (PSLF) program. The Biden administration’s overhaul fixed some of the technicalities and resulted in near-immediate forgiveness for tens of thousands of public service workers and eventual forgiveness for many more. However, the PSLF waiver expires on October 31, 2022. Employers should help to make sure that every eligible educator receives the student debt relief they deserve.
Utilize CARES Act Funds to Pay or Reimburse Employees’ Student Loans
The CARES Act modified the IRS code (Section 127), which allows employers, through established educational assistance programs, to pay or reimburse employees’ student loans up to $5,250 per year tax-free to both the employer and the employee.
The student loans can be for education received before employment or education the employee is currently pursuing while employed.
Payments can be made to the employee, the lender, or the student loan servicer that processes payments for the lender.
Congress extended this benefit through January 1, 2026. The U.S. Department of Education released guidance that school districts can use the emergency federal funding from recent stimulus bills to create and support this program.