Mailbag: A Student Loan Fiasco in Kentucky

Last week, we ran a post critiquing The New York Times’ coverage of the collapse of a popular student loan forgiveness program in Kentucky that was designed to encourage students to become school teachers. We credited the Times for bringing national attention to the struggles of thousands of newly-minted teachers who were left in the lurch when the Kentucky Higher Education Student Loan Corporation (KHESLC), the state’s nonprofit student loan agency, decided to pull the plug on its “Best in Class” program. But we took the newspaper to task for missing the real story: how officials at the Kentucky loan agency had set the program up for failure by financing it with funds it had improperly obtained by engaging in a risky scheme to overcharge the federal government tens of millions of dollars.

Since then, we have been overwhelmed by the responses we have received on the post. Nearly 100 Kentucky teachers have written to us, explaining the hardships they have faced since the loan agency shut down the program. Today, we thought we’d put a human face on the scandal by printing excerpts from comments we received from the teachers.

Drawn to Public Service by a Promise

The stories they tell are remarkably similar — about how they were drawn to public service by the promise of having their student loans forgiven. Most of these people, many of whom left other lines of work to take part in the program, say that they never would have been able to consider entering such a low-paying field without the help that the Kentucky loan agency [also known as the Student Loan People (SLP)] offered them:

This promise of loan forgiveness is one major reason I decided to enter the education field, leaving behind a higher paying job in order to teach and make a difference in lives of students in Kentucky. Now I am struggling to make ends meet, and I am forced to consider returning to my previous line of work in order to pay off my student loans. It is a sad time for education in Kentucky. (“Best in Class Article,” Shelly)

The financial burden of paying off loans for a life of service to today’s youth, with pay that is well below what the standard should be for educating tomorrow’s leaders is heart wrenching. I entered into this program with good FAITH and would have been unable to fulfill the financial obligations without this program and would therefore been unable to pursue a teaching career. I am now left with such debt that with teacher’s salary I will have to take drastic measures to survive financially. (“Thank you for the truth,” Jo)

I was financially stable with my head well above water until I went back to school for a degree in special education. I NEVER would have gone back if this loan had not been available. Kentucky was so desperate for teachers that they offered this to get us all in there and then left us high and dry on our minimal salaries. I don’t have an extra $492 a month for the next 9.9 years to pay for their false promises and budgeting mistakes. (“Best in Class,” hjdobs01)

Disputing the Loan Agency’s Spin

Many of the teachers expressed outrage over recent statements KHESLC officials have made, denying that they ever promised borrowers that funding for the loan forgiveness benefit was guaranteed. Had they known that the program was in such a precarious state, the teachers say, they would have definitely thought twice before taking part in it:

I, like so many other KY teachers, was told in very clear and persuasive terms that as a special education teacher in KY loans taken out through the Student Loan People would be completely and totally repaid after five years…I spoke several times with the SLP office, the financial aid office at the University, and past borrowers who assured me that their loans had been paid off just as promised. (“What’s ‘Best‘,” DanaKYTeacher)

The Student Loan People promised me that they would repay my loans, and there was never any doubt that in my mind. As a matter of fact, I called more than 5 times and made sure that I spoke to different people each time, just to make sure that I understood the program. (“Student Loan People,” Rebecca Broughton)

My wife and I both went back to school with the understanding that SLP would pay the loans off over a five year period. We checked many times, we called all the right people, we verified that we completely understood the program, and we joined the Best in Class program. What is CLEAR now is that we have all been duped! (“SLP,” Bill)

Struggling to Make Payments

The teachers also wrote about the hardship they are now facing being deeply in debt with loans that they never expected to have to pay off:

I am now thousands and thousands in debt, thanks to the Best in Class people. I am 57 years old and left retail after 35 years to help Kentucky’s children. I never would have put my family in such a precarious position financially if it weren’t for the promises made by the people who lent this money.(“Kentucky Loans to Teachers,” Eddie Ginsburg)

I left the business world to go back my first love — teaching. I am now a special education teacher who specializes in children with functional mental disabilities in a rural school district. I love my job and my kids — but since I am 58 years old, I will have to back over $25,000 in loans over the next 10 years. This means that if for any reason I have to retire before I am almost 70, I will have to make these huge payments out of my Social Security or school retirement check. I won’t be able to afford to retire. (“Best in Class Fiasco,” Diana Shepherd)

With the cost of living, rent, car payment, insurance, medical bills and undergraduate loans that are still being paid for, with an additional $300 a month payment it would be almost impossible for me to keep myself up, let alone get married and try to start a family with someone else…The people at the top that make the decisions to put a stop to programs such as this have no outlook on the hardships that they are putting those that offer such a valuable service to the commonwealth. (“Best in Class, Best in Lying,” Brandon Hibbard)

A Lack of Political Will

The teachers said they were particularly disappointed with the response they have received so far from the political leaders who are supposed to represent them in the state legislature and the U.S. Congress. While many wrote in about this, one educator was particularly eloquent in describing his disbelief and disgust:

The incredible aspect of this whole ordeal has been how unwilling so many politicians are here to help. Everyone one always campaigns on the value of education and how much they support the need to provide the best for our children, yet KY state legislators, KY congressmen, KY’s governor, and KY’s attorney general have all done their very best to distance themselves from this issue…KY teachers have been ethically, financially, politically, and legally wronged; if politicians can’t step up to the plate and do something meaningful in regard to their promises and the future of KY’s educational system, then what should any of us really expect from them? (“Failure of Promises,” Bryan)

Another commenter, who is not a Kentucky teacher, expressed a similar view:

I would think Kentucky delegates in Congress would be all over this story putting pressure on the state and federal level to fix this problem…They would set themselves apart better protecting their own constituents who were duped by bad policy and bad decisions on the part of the lender. (“Great Job,” Budget Watch 64)

So what can be done to help these teachers and avoid similar debacles in the future? We’d love to hear what you think. Please send in any thoughts or suggestions you may have for remedying this situation.

And as always, we appreciate all the comments we have received on this topic and others. Keep them coming.