Study: Teacher Loan Forgiveness Helps With Retention in High-Need Areas

By Allie Bidwell, Communications Staff

Many school districts across the country struggle to recruit and retain qualified teachers in certain subject areas, and in particular schools and areas that are of higher need. But providing benefits such as incentive bonuses or loan forgiveness can help significantly improve teacher retention, according to a new study.

The study, published in the Journal of Policy Analysis and Management, analyzed data from one of the longest-running teacher loan forgiveness programs, Florida's Critical Teacher Shortage Program (FCTSP), which began in the mid-1980s, and was ended by the state legislature in 2011. Nationwide, at least 20 states offer some kind of loan forgiveness or scholarship program for teachers, and the federal government will forgive up to $17,500 of debt for highly qualified full-time math, science, or special education teachers who teach continuously for five years in a low-income school.

The study's authors – Li Feng, an associate professor of finance and economics at Texas State University, and Tim Sass, a distinguished university professor in the Andrew Young School of Policy Studies at Georgia State University – found that loan forgiveness reduced attrition rates for middle and high school math and science teachers by 10.4 percent (math teachers) and 8.9 percent (science teachers).

They also found that a one-time bonus could reduce teacher attrition by as much as 32 percent in the short-run. In 2000, when the state legislature appropriated $60 million for one-time recruitment and retention bonuses, the probability of exit dropped 32.2 percent. However, because it was a one-time bonus, it "may not have significantly affected long-run career plans,” the study said.

"We find that loan forgiveness and targeted bonuses can both substantially reduce teacher attrition in high-need areas, although bonuses appear to have a larger impact in the short run,” the study said. "We then translate these retention effects into estimated impacts on the steady state distribution of teacher experience and conduct a rough cost-benefit calculation; both loan forgiveness and bonuses appear to be cost-effective policies.”

Because there were changes over time to which subject areas were considered as shortage areas, as well as significant changes in funding, Feng and Sass were also able to evaluate the effects of the funding of the program on teacher retention, and found the impact fluctuated with funding. In 2002, for example, the state legislature cut funding for the program by nearly 48 percent, which reduced payments per teacher. Until that point, the payouts for teachers had remained fairly stable, between $2,000 and $3,000 per teacher per year. Eligible teachers could receive payments for four academic years or a total of $10,000, whichever came first.

The study found that during the higher-payout era before the large funding cut, the probability of exit for special education/gifted teachers dropped between 10.1 percent and 12.3 percent. But during the lower-payout era, the exit probability only dropped by 0.5 percent.

"Fixed pay scales coupled with variation in the opportunity cost of teachers and working conditions has led to chronic shortages of teachers in particular subject areas,” the study said. "Our findings suggest that educational subsidies, particularly ex-post loan forgiveness for early-career teachers, can be effective tools in promoting the retention of teachers in high-need areas.”


Publication Date: 11/7/2017

You must be logged in to comment on this page.

Comments Disclaimer: NASFAA welcomes and encourages readers to comment and engage in respectful conversation about the content posted here. We value thoughtful, polite, and concise comments that reflect a variety of views. Comments are not moderated by NASFAA but are reviewed periodically by staff. Users should not expect real-time responses from NASFAA. To learn more, please view NASFAA’s complete Comments Policy.
View Desktop Version