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Administration proposes $150 million Prop. 98 loan-repayment program for educators in priority schools
Summary
The governor’s budget desk proposed $150 million in Proposition 98 funding to pay up to $20,000 of educational loan debt for credentialed educators who serve in priority schools, disbursed as $5,000 per year for up to four years.
Sacramento — The governor’s budget proposal includes $150 million in Proposition 98 funding to launch a new loan-repayment program aimed at recruiting and retaining credentialed educators — including teachers and pupil services staff — who serve in priority schools.
Department of Finance analyst Jody Lieberman told the Assembly Budget Subcommittee No. 3 that the proposal would prioritize educators with unresolved educational debt who hold a preliminary or clear teaching or pupil services credential and who serve in a priority school or California State Preschool Program administered by a local educational agency.
Program design and eligibility: Under the administration’s proposal, eligible educators could receive up to $20,000 in loan repayment (disbursed at $5,000 annually for up to four years). Service performed before July 1, 2025, would not count toward eligibility. The superintendent, with the approval of the State Board of Education executive director, would select a county office of education or consortium to operate the program. The county office would handle online payments, outreach and reporting; the program is intended to run through county offices so Proposition 98 funds flow via LEAs.
Why it matters: Department of Education and administration witnesses told the committee that rising undergraduate and credentialing costs contribute to deterrents for prospective teachers, and that loan-repayment-style incentives are a commonly cited recruitment and retention tool in other states. The administration cited existing research showing average teacher educational debt and the attractiveness of debt relief as a recruitment strategy.
The Legislative Analyst’s Office recommended rejecting the proposal during the hearing, citing limited evidence on the effectiveness of similar programs and noting the existence of federal forgiveness programs that some teachers may already access. LAO analysts also flagged administrative complexity and the need for clearer targeting to ensure the greatest impact for dollars spent.
Student Aid Commission staff joined the panel to discuss administration options if the Legislature decides to adopt the proposal. CSAC noted that the agency already runs smaller loan-repayment programs (for example, public interest attorney loan repayment) and that the commission could provide administrative support, though statute and Proposition 98 rules affect how funds must flow.
Committee members questioned whether loan repayment is preferable to other approaches such as increasing stipends for student teachers, scholarship/grant packages that reduce debt before it is assumed, or pay increases that address working conditions. Several lawmakers asked agencies to model scenarios for targeting repayments to the highest-need schools or to subject areas with persistent shortages, such as special education and STEM fields.
The subcommittee left the item open and asked staff to produce additional analysis on administrative options, likely take-up and targeted approaches that could maximize retention in the most affected schools.
