SC expanding student loan forgiveness for teachers in effort to keep them in the classroom

COLUMBIA — South Carolina is spending $10 million to help more teachers pay off or erase their student loans.

Legislators tucked the money in the latest state budget for the new program operated by South Carolina Student Loan Corp.

Under the program, teachers who have federal or private student loan debt can apply to refinance as much as $27,500 worth of those loans for a fixed, 2% rate over 10 years. In some cases, that debt can be forgiven.

Ray Jones, chief product officer of SC Student Loan, estimates the program will reduce or eliminate debt for upwards of 360 working teachers in the state.

The nonprofit loan organization will split the state funds — $5 million to refinance at the lower interest rate and $5 million to wipe out loans for teachers who continue working in high-need school districts for five years.

“I believe public education is the foundation for the success of our state’s young people,” said Rep. Neal Collins. “This program is intended to provide financial support for teachers to keep them in the classroom. This is our way of showing them their service is important to the people, especially the children, of South Carolina.”

The Easley Republican sponsored the rule included in the state budget and supported the one-time funding for it. While the dollars apply only to the current fiscal year, he thinks legislators will likely keep the program in place indefinitely.

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“We’ve been investing in education, in my opinion, pretty heavily and I think it’s starting to show,” Collins told the SC Daily Gazette. “I’m encouraged about the direction of our state, as far as teachers are concerned. But, obviously, we have a long way to go as well.”

Retention versus recruitment

SC Student Loan, on behalf of the state, has operated the SC Teacher Loan program since 1984.

College students studying to be teachers can apply for the loan to cover their tuition. When they graduate, if they teach in what the state education agency deems a “critical” district or subject area for five years, they can apply to have it forgiven.

For the current school year, 45 of the state’s 74 public school districts qualify as critical, as do more than 30 subject areas.

The state designed that program as a recruitment tool to convince more South Carolina college students to pursue a degree and career in education.

This new program is different, aimed as an incentive to keep teachers in the classroom — those who, for whatever reason, did not take out loans through the legacy Teacher Loan program.

While the teacher shortage crisis has lessened, vacancies remain an issue. Districts started last school year with 706 empty teaching positions, according to the latest report from the Center for Educator Recruitment, Retention and Advancement.

“Our idea was those that didn’t get the Teacher Loan in the past or didn’t get the maximum still need an opportunity to have a low payment or have a forgiveness option,” Jones told the SC Daily Gazette. “What we’re hoping is to show some successful refinancing of mostly private educational debt that may have very high interest rates.”

These South Carolinians owed more than $120,000 in student loans. Now their debt is forgiven.

Some for-profit lenders charge interest rates of 12% to 16%, Jones added, and even federal loans come with rates of 8% or 9%.

“We believe if they refinance that debt into this 2% rate, that could be a huge cost savings for our teachers,” he said.

For example, someone with a $20,000 loan at a 10% interest rate is going to pay about $12,000 in interest over 10 years. Refinancing under this new program would take that down to $2,000 in interest and monthly loan payments would decrease by about $100.

“South Carolina’s teachers are doing some of the most important work in our state, and we want them to know we have their backs,” state education Superintendent Ellen Weaver said in a statement. “By helping educators keep more of their hard-earned money in their pockets, we’re investing in them and removing one more barrier to building a long and rewarding career serving South Carolina students.”

High demand

Jones is expecting high demand for the program. Applications began pouring in Monday, the first day it opened.

Patrick Kelly, a lobbyist for Palmetto State Teachers Association, agrees.

“I think it’s a fantastic use of state funds,” Kelly told the SC Daily Gazette. “This is a really important tool for educator retention in South Carolina.”

For starters, Kelly said, a surprising number of education majors go into college unaware of the Teacher Loan program and missed out on the opportunity to apply while working on their degree.

And when it comes to forgiveness of federal student loans, the program that wipes out any debt remaining after 10 years of payments for those working in public service careers “is not as robust as it once was,” Kelly said.

The U.S. Department of Education, in July, enacted changes to the program that is already facing major backlogs.

“So this is really a strong move by the state to backfill that,” Kelly said.

South Carolina also is one of the fastest growing states in the country. Educators who moved here from elsewhere and keep teaching may also apply to refinance any student loans they still have.

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And the number of teachers who get certified through alternative programs in the state rather than studying education in college is growing, Kelly said. These might be people with English or math degrees or who worked in a different field but later decided to pursue teaching careers.

The new loan refinancing or forgiveness would apply to any loans they took out to get their non-teaching degree.

Nearly half of all teachers — 47% — in the state entered through a traditional undergraduate degree, according to researchers at the University of South Carolina. Alternatively certified teachers and those licensed in other states make up about 30% of the workforce, a sizable share.

Those same teachers carry a significant amount of student loan debt. In a survey of its members, the Palmetto State Teachers Association found half have debt of $30,000 or more.

“In a profession like teaching, where the minimum starting wage in the state is $50,500, having that much debt is really a significant financial burden,” Kelly said.