The Value of Student Debt Relief and the Role of Administrative Barriers: Evidence from the Teacher Loan Forgiveness Program

We explore how much borrowers value student debt relief, in the setting of the federal Teacher Loan Forgiveness (TLF) program, and further document whether information and eligibility for this program affect teacher employment decisions. The program cancels between $5,000 and $17,500 in debt for teachers who remain employed in a high-need school for five consecutive years. Using both quasi-experimental evidence and a randomized control trial, we find that neither eligibility nor a targeted information intervention result in changes in teacher employment decisions, despite the presence of sizable student loan balances in our sample. Information was found, however, to increase application and receipt rates for teachers who had already accrued the five years of eligibility. Additional evidence from contingent valuation surveys suggests that teachers do in general value possible debt relief. Incorporating qualitative evidence from focus groups, we conclude that take-up may be constrained by program complexity and administrative barriers that involve knowing which schools qualify, tracking employment records, having employers sign off, and coordinating with loan servicers.