A recent study in the Economics of Education Review Journal looks at one promising effort to recruit and retain teachers: providing upfront grants and loans to financially-strapped potential teachers to encourage them to become and remain educators.
The study focuses on Teach For America (TFA) candidates and extends an earlier randomized study that found that upfront liquidity—cash and loans—made it more likely that low-income young people could overcome entry barriers to teaching. In other words, with a significant-enough financial boost, low-income folks who applied to TFA were more likely than their higher-income peers to follow through and join—and ultimately show up for their first day in the classroom. This new study looks longer term, continuing to track the same teachers to see if they made it through their two-year TFA commitment and were more likely to remain in the field afterwards.
Some quick background: TFA offers transitional grants and loans (or TGL) to help cover the costs of joining the teaching profession—which in this context is essentially the cost of moving to the city where they have been assigned to teach. The study sample includes the highest-need applicants who applied for the grants, were accepted into TFA, and agreed to join, at which point they can receive TGL. The organization collects mucho financial information on TGL applicants and calculates how much grant versus loan money they qualify for. TFA estimates how much is needed to move a particular applicant to a particular city (expected expense) and how much the candidate can afford to pay toward that expense, then subtracts the latter from the former to determine the grant/loan amount. Any required repayments typically become due in January of their first year of teaching and often get repaid over eighteen months.
The average applicant has $6,500 in credit card debt, $20,000 in federal student loan debt, and just $241 in her bank account. The methodology from the initial study—which they stick with here—called for high-need applicants intending to teach in 2015 through 2017 to be randomized into three groups: a baseline grant package for each individual, using a modified version of the TGL formula (the control group); a treatment group receiving the baseline package plus a $600 grant; and a second treatment group receiving the baseline package and a $600 loan. In the second year, they added another arm to the study, giving applicants an additional $1,200 (in grant form) beyond the baseline package. Ultimately, the new design combines the outcomes from all treatment conditions and estimates the impact of extra funding in $100 increments. Analysts chose to combine loans and grants because they initially found that the total award mattered most, not how it was distributed. The mean total award for the sample was $4,000 (for the first decile of need, it was $5,000 total, and for the tenth decile, $2,200 total).
After digging into TFA tracking data (and LinkedIn for some details not in their database), analysts managed to get information on 85 percent of the applicants. The original study found that the highest need individuals were 1.8 percentage points more likely to begin teaching with TFA for every $100 dollars in additional “liquidity.” This new study shows that the previously-observed impact extended over a longer term, increasing the rate at which teachers persist in year one and ultimately complete year two. What’s more, the effect persists over time, as there is still a 1.53 percentage point impact on completing the two-year program for every $100 in additional monies that a prospective teacher was offered, which represents 85 percent of the original effect. Unfortunately, longer-term outcomes in year three are not reliable enough to report due to data quality issues.
The bottom line is that offering financially-strapped prospective teachers funds in the months before they would enter the classroom appears to increase the number of educators in the short- and mid-term. Admittedly, the Teach For America context is unique due to its non-traditional recruitment and training paradigms, so these results cannot be extrapolated to other programs. However, financial nudges have been moderately effective in many other education-related contexts, so it’s not beyond the realm of possibility that pre-employment “liquidity boosts” could work for other potential entrants to teaching—especially when the boosts aren’t that cost prohibitive, as is the case here.
SOURCE: Lucas C. Coffman et al., “Liquidity for teachers: Evidence from Teach For America and LinkedIn,” Economics of Education Review (September 2023).
