The Teacher Loan Forgiveness (TLF) program, which offsets between $5,000 and $17,500 in student debt for teachers who work in high-need districts for at least five consecutive years, is intended to combat the long-standing challenge of recruiting and retaining teachers in such areas. As of 2018, however, only two thirds of teachers who had graduated with a Bachelor of Arts degree in 2008 were aware of TLF, and fewer than a fifth had participated. This paper examines the effectiveness of TLF by exploring how much borrowers value student debt relief and whether information about or eligibility for TLF affect teacher employment decisions.
I. Eligibility Cutoffs
The authors apply a range of approaches to their study of TLF, including both a quasi-experiment and a randomized trial, as well as surveys and interviews. They first examine (quasi-experimentally, using a regression discontinuity design) whether teachers behave differently upon becoming eligible for TLF. While eligibility varies by state, schools are typically eligible if more than 30% of students quality for free or reduced-price lunch (FRPL). Using this threshold, the authors examine whether teacher turnover rates vary depending on whether or not schools offer TLF. They find the following:
II. Randomized Evaluation
Next, the authors examine whether informational barriers explain the lower-than-expected take-up of TLF. They implement and evaluate a large-scale randomized controlled trial in which they sent mailings aimed at increasing awareness of and facilitating enrollment in TLF to a random subset of eligible teachers. The authors tracked participants’ outcomes (as well as outcomes for a randomly selected control group) using follow-up surveys and administrative data on teacher employment patterns. They found the following:
III. Valuation Surveys
Next, the authors measure how much teachers value TLF. They administer a contingent valuation exercise, similar to the survey used by Brad Shapiro (2023), in which they asked teachers to choose from side-by-side comparisons of hypothetical schools where attributes including TLF eligibility and salary vary experimentally. They found the following:
IV. Informational Interviews
The survey results suggesting that teachers do, in theory, value debt relief stand in conflict with the modest take-up of TLF and the program’s limited impact on employment decisions observed by the authors. To better understand what frictions may limit take-up, the authors conducted focus groups with teachers and interviews with student loan servicers. They found the following:
The upshot is that eligibility for TLF alone is unlikely to spur dramatic changes in teacher retention. From a policy perspective, these results suggest that influencing employment choices requires additional information and incentives above and beyond those provided by the current TLF program. The authors note that should any future loan forgiveness program be implemented in the United States, ease of application and eligibility determination may be key to achieving broad participation.