Debating student loan forgiveness

Legislators look at giving in-state teachers a break on payments

Posted: Sunday, February 04, 2001

JUNEAU -- Forgiving student loans may not be the solution to a teacher shortage in Alaska, the head of the state's student program said Wednesday.

The House Special Committee on Education is looking at three bills that would forgive part of a student's college loans. Two are aimed specifically at teachers.

House Bill 37 by Rep. Gary Stevens, a Kodiak Republican, would forgive up to half an Alaska Student Loan for those who teach at least five years in the state. Rep. Joe Green, an Anchorage Republican, wants to do the same thing, but only for teachers who attended college in Alaska.

HB 54 by Rep. John Davies, a Fairbanks Democrat, initially would have forgiven up to 50 percent of a student loan for any graduate who worked in Alaska five years. He amended it to offer a lower interest rate, instead of loan forgiveness.

Diane Barrans, executive director of the Alaska Commission on Postsecondary Education, said experience shows those programs may not draw many takers. Only about 20 percent of people who were eligible took advantage of an earlier program that forgave portions of Alaska loans for working in the state after graduating.

Only 23 percent of eligible students are taking advantage of a loan forgiveness program designed to entice rural Alaska high school students to return to the Bush to teach, Barrans said.

"Nationally, in my conversations with other colleagues, they find loan forgiveness programs to be less than effective," Barrans said.

Students may decide at 17 and 18 that they can borrow money for their education because the loan will be forgiven, but their career plans may change by the time they leave college four years later. That can leave student loan officials trying to recover debt from people who weren't prepared to repay it, Barrans said.

Also the forgiveness programs apply only to Alaska residents, Barrans said. Seventy percent of Alaska's teachers come from out of state.

Some states find it works better to create a pool of money to spend on signing bonuses or loan forgiveness in areas of critical teacher shortages, Barrans said.

But Stevens said the experience with other loan program doesn't necessarily apply to what he is proposing.

"These are different times. We are in a national bidding war with other states to get teachers," Stevens said.

"From people I talk to who are thinking about going to school that would make a difference to them," Stevens said.

The Education Department's position is that loan forgiveness can be one of a number of tools to combat a teacher shortage, said Beth Nordlund, the department's legislative liaison.

Over the last 10 years the average teacher salary in Alaska has gone down almost 12 percent in inflation-adjusted dollars, the largest decrease in the nation, Nordlund said. On the first day of school this year 84 teaching jobs in Alaska were unfilled and two months later some remained open, she said.

The committee so far has taken no action on any of the loan forgiveness bills. Chairman Con Bunde, an Anchorage Republican, said he expects the panel will settle on a single bill next week.

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