One year later, Michigan starts helping teachers repay student loans

• More than 8,400 Michigan educators in line for student loan repayments under new state program
• Lawmakers created the program a year ago, but a ‘complicated’ application process slowed the state funding
• Many school districts failed to apply on behalf of their teachers, but lawmakers are redesigning the program for future awards

One year after Gov. Gretchen Whitmer signed a state education budget with $225 million in special funding to help teachers pay their student loans, the state is beginning to distribute that money to local school districts. 

Officials say the first round payment – totaling $16.8 million to cover loan costs for 8,460 educators – was slowed by a “complicated” application process that discouraged more schools from participating. 

All told, 485 of nearly 900 districts applied for funding so far. In some cases, those were intermediate districts who could have applied on behalf of multiple local districts.

Lawmakers have already retooled the college loan program in hopes of getting more applicants in future rounds, and supporters hope it will still help districts attract and retain teachers as they work to improve sluggish test scores. 

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The program is designed to pay educators with student debt up to $200 or $400 a month to help cover the cost of their loan payments. But as designed last year, first-round funding is going to local school districts, which will then reimburse teachers. 

That first round was distributed to local districts on July 22 as part of their normal state aid payment, according to Bob Wheaton, a spokesperson for the Michigan Department of Education. 

The money is expected to benefit 640 educators in Detroit, 185 in Dearborn, 146 in Ann Arbor, 135 in Grand Rapids and thousands of other educators across the state with student loan debt. 

“The application process was complicated,” Wheaton acknowledged. But lawmakers have already “streamlined the process” for next year, he said. 

This year’s process required districts to apply on behalf of their teachers, verify that employees met all the criteria and then hold onto state funds in case an employee’s student loan payment amount changes, according to an MDE presentation from March. 

Moving forward, student loan borrowers or their bargaining units will apply directly for the student loan payments, rather than the school districts. 

That should help get more funds to more educators, said state Sen. Darrin Camilleri, D-Brownstown Township, who acknowledged the original program design was driven by the Legislature. 

“I think part of the problem, previously, was that some school districts just didn't want to do this on behalf of the teachers that they serve,” Camilleri said, “and that is a huge issue that I had with some of these low numbers that you're seeing from this initial phase of the program.”

Camilleri previously called on MDE to schedule additional application periods for the program. The state education department is currently expected to open up another round of applications this fall. 

The amount of funds an employee can receive is also dependent on what proportion of students are economically disadvantaged in their district. High-poverty districts can distribute up to $400 a month per borrower, where other districts could distribute up to $200 a month per borrower.

A ‘huge issue’

Camilleri, a champion of the program, acknowledged the initial design was driven by the Legislature and said he hopes switching the application process to student loan borrowers ー rather than their districts ー will make it easier for people to get the funds. 

“I think part of the problem, previously, was that some school districts just didn't want to do this on behalf of the teachers that they serve, and that is a huge issue that I had with some of these low numbers that you're seeing from this initial phase of the program,” Camilleri said. 

Camilleri said there are likely a lot more educators who would qualify for the relief besides 8,460 who are in the first round of funds.

Jordan Weinstein, a teacher in Detroit Public Schools Community District, has nearly $100,000 in federal student loans for undergraduate and graduate studies. She anticipates receiving funds from the program.

“As I understand it, I would be happy with it, but I won’t believe it ‘til I see it,” Weinstein said. 

She said she told a person working to help her with the process that “At every single step of this process, I know you have lost people who would qualify for this but are going to struggle to navigate it.” 

Camilleri said he wanted the money to be distributed quickly but is optimistic that recent changes to the program passed in the new state education budget will lead to a more streamlined approach.

Moving forward, student loan borrowers or their bargaining units will apply directly for the student loan payments rather than the school districts. 

“We do believe that this will allow for more money to start getting into the pockets of educators much more quickly, starting with this budget year,” Camilleri told Bridge. 

Student loan relief

The new budget signed last week also includes another $25 million for the student loan repayment program, including $600,000 for MDE to contract with a vendor and use for administrative costs of the program. 

The first round of funding that went out in July consisted of lump sums that districts can use to cover educator student loan payments dating back to October of last year, and then use remaining funds for future monthly payments, according to the state. 

The Michigan program for educators is the latest in a series of federal and state efforts to address student loan debts. 

Federal student loan borrowers had 0% interest rates and no required payments for more than three years. The U.S. Supreme Court struck down President Joe Biden’s broad student loan forgiveness plan in June 2023 and the federal government began requiring payments to resume in October that year. 

Biden promised a 12-month grace period as borrowers got back to paying their loans: borrowers who did not make payments would still have interest accrue on their loans but would not be reported to debt collectors. 

“Efforts to relieve student loan debt seems to be perceived as favorable, however given the various changes on the federal level, and this recently adopted state program, the verdict is still out about the intended results,” said Chrystal Wilson, DPSCD assistant superintendent of communications and marketing, in an email. 

“As a district, our job is to provide resources that are beneficial rather than burdensome to our employees, as you mentioned there are several requirements. If the requirements are too stringent the benefits will be minuscule at best.”