Debt relief and grad school: The case of teachers

While the broader conversation on debt relief has been mostly on undergraduates, there have been far less sympathetic attitudes towards relieving the graduate or professional degree holders. Broad federal efforts to relieve the student debt of graduate and professional degree holders—for example, doctors and lawyers—are viewed by some as a waste of taxpayer dollars to help the well-off.

Although some of the 37 percent of graduate students who hold student debt do go on to pursue professional degrees or Ph.Ds or enter fields that yield high salaries, some of these students enter public service jobs, many of which either require a graduate degree or pay higher salaries for those with one. Public service jobs, like teaching, do not yield the same economic benefits as other fields that require such high levels of education.

After 21 years of working as an English teacher, the student debt Rich Haase had accumulated from his undergraduate and graduate education was erased. His family was able to make new investments, and Haase began to work with his local teachers’ union to help over 140 members apply for the Public Service Loan Forgiveness program, which cleared his debt. So far, the Half Hollow Hills Teachers’ Association, representing the Half Hollow Hills school district in Long Island, NY, has successfully worked to get $200,000 in debt held by educators in the district forgiven.

New York State is one of the states that requires teachers to have a master’s degree. These degrees compound higher levels of debt onto educators, who are earning much lower salaries than others.

“I was ecstatic,” said Haase. “I didn’t have trouble paying bills, but there are people in that boat.” He continued, “You have to have a master’s degree to teach in New York State. Our members are never going to be rich. It is an OK living, but they are never going to be rich.”

In 2020, around 6.5 percent of all graduate degree students were pursuing degrees in education. These students graduate with higher levels of debt and earn lower salaries to pay off such debt. Especially for younger educators, faced with growing tuition and stagnant wages in the field, the debt burdens are larger.

Younger teachers are more likely to have taken out student debt to finance their education compared to their elder peers. More than half of students entering education under the age of 35 borrowed at least $65,000, and they are entering the field with salaries as low as $40,000, according to a study by the National Education Association.

According to a 2021 study, 42 percent of educators, including students planning on entering higher education faculty positions, took out at least $65,000 in student debt. Faced with low wages in their early career, it takes teachers much longer to pay off their student debt, allowing it to grow with interest. The same study found that 42 percent of educators with more than 11 years of experience still have student loan balances, with 29 percent having a remaining balance of at least $65,000.

Although public service workers have been eligible to pursue debt relief through the Public Service Loan Forgiveness Program since 2007, the program’s success was long stunted by administrative issues, resulting in a 98 percent denial rate. The Biden administration has implemented new changes to the PSLF program through a waiver that so far has relieved $6.8 billion in student debt. These changes are set to expire in October.

Teachers are one of the public sector worker groups eligible for loan forgiveness under PSLF. However, it is unclear how many teachers have received relief through the program, because the Education Department does not collect data on the occupations of borrowers who have applied for or received PSLF.

It is unclear whether the Biden administration plans to include graduate students in the impending proposal to relieve at least some student debt. The Education Department declined to comment on any update regarding the inclusion of graduate students in the administration’s debt relief proposal.

“When we’re talking about the student loan conversation, particularly when it hits graduate school, I think people automatically assume that this is a luxury degree. That it is doctors and lawyers and you’re choosing this and therefore you’re going to get a job where you are going to be making tons of money,” said Kristen Eichhorn, the dean of graduate studies at the State University of New York at Oswego. “It is not a luxury degree. You don’t have a job unless you have this degree credential.”

The State of Teaching in the US

The US is currently facing a teacher shortage, fueled by a mix of stagnant wages and pandemic-related stress and burnout. Many districts are facing high levels of retirement compounded by a declining number of students pursuing careers in education. Although the shortage has been exacerbated by the pandemic, it existed long before it. Enrollment in education-related programs declined by a third between the academic years 2008–09 and 2018–19, according to a 2022 report.

The level of education, training and certificates needed to become a teacher vary state by state. In New York, Ohio and Massachusetts, for example, all K-12 teachers are required to earn a master’s degree within the first five years of signing a teaching contract. However, most teaching positions will offer larger salaries to those with graduate degrees.

The nationwide average starting salary for teachers is just over $54,000, with 47 percent of school districts offering a starting salary under $40,000, according to data from the National Education Association. For teachers with a master’s degree, the nationwide average starting salary jumps to $62,000.

The ability to make long-term financial decisions when it comes to investing in higher education is difficult for teachers because of the current changing state of federal and state aid programs and stagnant wages in the teaching sector.

Haase noted that teachers often enter the workforce earning a low salary under the assumption that their salaries will grow as they accrue time in the field. However, he stated that these low wages, along with the increasing politicization of education and increasing levels of violence on school grounds, have driven many away from the field.

“Right now you’re coming to work with violence and cultural division,” said Haase. “I think a lot of young professionals are going to look at how other millennial professionals work, and they’re going to look the other way.”

The debts held by teachers have also been noted as a barrier to achieving racial diversity in the classroom. The disproportionately large debt burdens borne by Black students—particularly because Black students are more likely to take out more federal student loans to finance their undergraduate education and they take on higher debt loads to pursue the graduate education necessary for teaching—act as a barrier to many entering the field.

Current Programs for Graduate Students to Manage Debt

Although debt relief is welcomed by many as a solution to address graduate student debt, many said that it would not address long-standing issues in affordability of graduate education, especially for low-earning jobs like teaching.

“I think you need to restructure higher education moving forward and make it more affordable to people who want it,” said Haase. “We need to start thinking long term, and we have got to stop trying to put Band-Aids on problems we’ve already created.”

Possible solutions to debt held by those entering the teaching field, and to graduate education more broadly, cited by advocates include investing more federal resources into expanding the Pell Grant program. Amy Scott, associate vice president of government relations at the Council of Graduate Schools, referenced a bill that would allow graduate students who qualified for Pell Grants in their undergraduate years to use any remaining Pell eligibility toward their graduate education, as a helpful solution.

Long-term improvements to debt relief programs like PSLF and Income-Driven Repayment, many noted, would also be helpful, but they need to be done in a sustained way so it is easier for borrowers to plan how they will finance their education years before they graduate.

Haase was able to get the $19,300 of his remaining student debt relieved through the PSLF program. He had originally applied for the program in 2018 but was denied. Once the Biden administration announced the PSLF waiver, which lowered some of the administrative requirements necessary to qualify for the program, Haase tried again.

“To say that I was skeptical would be an understatement. I had already been rejected—I heard nothing good about the program,” said Haase. “I was like, ‘I’m going to give it another shot.'”

“We are looking at this great teacher shortage, and PSLF is this black box that everyone is asking about that only works under these extremely rare circumstances,” Haase continued. He said that as the Oct. 31 deadline for the PSLF waiver approaches, “we are losing the opportunity to help them.”

Eichhorn also stated that given the changing demographics of individuals pursuing higher education, more needs to be done at an institutional level to create programs that support adults and continuing learners. Part of this, she said, is creating clear educational objectives that “people can get in and out and see the benefits of what to do on the back end of it.”

One solution that has been suggested is to add graduate student borrowing caps based on a debt-to-income ratio. Students pursuing graduate degrees in fields that earn lower incomes would not be able to take out high levels of student debt. Currently, a federal direct unsubsidized loan caps out at $20,500 a year for graduate school students. Another program, Graduate PLUS loans, allows students to borrow up to the cost of attendance minus other financial aid.

Julia Kent, the vice president of best practices and strategic initiatives at the Council of Graduate Schools, said that this sort of an approach could “run the risk of pushing students who are already low income into more costly financing options, like private loans with higher interest rates.”

Kent also said loan caps do not take into account the wide range outcomes of graduate programs and the job associated with each program.

“Caps on federal loans is a one-size-fits-all approach that doesn’t take into account the particular student, [the] type of program they’re pursuing and the potential career pathway they’re going to be following,” Kent said.

Senator Elizabeth Warren, a Democrat from Massachusetts, a former teacher herself and a proponent of canceling up to $50,000 of student debt per borrower, said that it is important to include graduate students in any plan to address student debt.

“President Biden should absolutely cancel a big chunk of student debt for teachers and school counselors, including many who are underpaid while providing an essential public service,” Warren told Inside Higher Ed. “Many hardworking teachers, particularly women of color, pursued a graduate degree in education to boost their pay and advance at work but are now getting crushed by federal student loans.”

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