STATE LURES TEACHERS WITH CUT IN LOAN RATE

Missouri teachers can cut their student loan interest rate by more than half by enrolling in a new state program.

More than 500 Missouri teachers have enrolled in the new rate reduction program announced by Gov. Mel Carnahan two weeks ago. The program is a new initiative designed to attract and keep teachers in Missouri schools.

"This program should help attract and retain educators and assist us in addressing teacher shortages that have been experienced in some Missouri school districts, especially in the St. Louis area," said Carnahan, who announced the program at Harris-Stowe State College in St. Louis. "The importance of keeping teachers teaching in our state cannot be underestimated."

Teachers can receive a 2.25 percent reduction in the interest rate on student loans owned and serviced by the Missouri Higher Education Loan Authority (MOHELA), the state's designated secondary student loan market.

MOHELA executive director John D. Wild said 512 teachers, including 33 graduates of Southeast Missouri State University, were registered in the rate reduction program as of Thursday. Enrollees receive a special interest rate of no more than 6 percent from MOHELA that is reduced by another 2 percent if they agree to have payments automatically deducted from their checking accounts each month.

In mid-July, federal student loan interest rates were increased to the 8.25 percent ceiling. At that interest rate, the standard repayment for a $10,000 student loan would be $14,718 over 10 years.

Wild said teachers with a $10,000 student loan who took advantage of MOHELA's rate reduction program would pay $13,473, a savings of $1,244. The savings would roughly double for teachers who enrolled in the automatic payment program, he said.

Funding for the new program dates back to the creation of MOHELA in 1982. Since its creation, Missouri governors have been generous in granting the agency tax-exempt bond authority, which has been used to develop the funding that should help ease the financial crunch for new teachers, said Wild.

He said teachers were a good risk for this type of program because they are easily identifiable.

"Teachers are easier to quantify because all have to be college graduates and have to teach in accredited districts," Wild said. "What it means is that teachers who quite frankly never have the highest salaries can make their dollars go farther. We need teachers to stay in this for the long haul."

Not all of the state's 15,000 public and private schoolteachers will qualify for the program. Only teachers working in Missouri schools that are accredited by the state are eligible for the program. And student loans must have been attained through the Federal Family Education Loan program, which provides loans from the state through local banks.

Wild said teachers who received student loans to attend Southeast Missouri State University, Truman State University, Missouri Western State College, and most private colleges in the state are eligible for the program. However, the University of Missouri system, Missouri Southern State College, and Northwest Missouri State University all participate in the National Direct Student Loan program, so teachers who attended those schools will not qualify for the rate reduction.

"If they pick a MOHELA business partner, they'll be able to qualify for this," said Wild. "Otherwise, the only way for them to qualify is for them to demand they sell their loans to MOHELA."

The MOHELA plan is similar to federal initiatives created to provide incentives for teachers to work in under-resourced school districts. The federal government will partially or completely cancel Perkins Loans and National Direct Student Loans for full-time teachers who work in schools serving a high concentration of low-income families or who teach handicapped students.

Teachers who teach subjects that have "field of expertise" shortages such as math, science, foreign languages and bilingual education also qualify for loan cancellations.