How the Department of Education Misses the Mark on Public Service Loan Forgiveness for Early Childhood Educators
President George W. Bush signing into law the College Cost Reduction and Access Act, which created the Public Service Loan Forgiveness Program. Photo courtesy of Chris Greenberg.
On September 27, 2007, President George W. Bush signed into law the College Cost Reduction and Access Act (CCRAA). Not long before, a conference report filed in the House of Representatives confirmed Congress’s intent behind a CCRAA provision: the student loans owed by borrowers who have made 120 payments under income-based or standard repayment plans while employed in certain public service jobs would be forgiven. Indeed, the law both directed the Department of Education (DOE) to establish the Public Service Loan Forgiveness (PSLF) Program and enumerated a list of qualifying jobs, early childhood education among them. Accessible to the DOE was the CCRAA’s statutory language, presidential communications, and a committee report, all of which cemented the childcare workforce as an eligible recipient of student loan forgiveness. Even with an explicit legislative directive, however, the DOE still ignored one of the country’s most economically exploited public servants: the early childhood teacher.
Under the PSLF Program’s current regulations, only nonprofit organizations are “qualifying employers,” and if a borrower sustains “qualifying employment,” they are eligible for a student loan write-off. Though Congress instructed the DOE to extend relief to all childcare teachers, irrespective of their program’s tax-filing status, the department drew artificial eligibility distinctions between educators hired by nonprofit and for-profit childcare programs, denying debt cancellation to a substantial portion, if not the majority, of the early childhood workforce. Without a doubt, the Department of Education must rewrite its regulations to consider for-profit childcare programs as “qualifying employers.”
The Current State of the Early Childhood Workforce: A Devaluation of Blackness and Femininity
A negligent indifference to Congress’s guidance, the DOE’s definition of “qualifying employer” has unique implications for early childhood educators. Childcare workers remain nearly at the bottom of all U.S. occupations when ranked by annual pay, regardless of their employer’s tax-filing status, 501(c)(3) or not. Notably, women comprise 96.7% of the early care workforce. In a recent testimony before the Senate Committee on Finance, Fatima Goss Graves, the CEO of the National Women’s Law Center, detailed best the gendered exploitation of America’s early educators: “[It is] women’s unpaid and underpaid labor that primarily bears the cost of maintaining our nation’s care infrastructure.”
Overrepresented in home-based care, Black and Latine teachers confront distinct obstacles. Superior, state-administered quality ratings increase the subsidies such caregivers receive from the state, aimed to offset the low-cost care volunteered to low-income families. For Black and Latine early educators, facility upgrades, elevated credentials, and annual trainings—all rewarded with higher quality ratings—are inaccessible, not least because lending, homeownership, and educational structures inhibit women of color’s wealth accumulation. Considerably below the true cost of providing childcare, the reimbursements linked to low-quality scores rarely disincentivize home-based providers from caring for low-income children. Instead, such providers frequently accept the decreased wages.
Revising eligibility criteria to reflect today’s socioeconomic reality—the labor of all early childhood teachers remains undervalued by histories of racialized misogyny—would extend to the full childcare workforce a loan cancellation to which they are entitled and from which they would benefit. In fact, 19% of childcare providers, the Stanford University Rapid Survey Project found, carry student debt. For an industry struggling to hire, broad access to PSLF may motivate teachers to enter the workforce. Of course, free from a congressional overhaul in the federal subsidization of childcare—one which funds childcare as a public good—the industry’s unsustainable business model will further exacerbate supply gaps, raise prices for parents, and undercompensate its workforce. To be sure, early childhood educators’ access to the loan-discharge program is not the solution to the U.S.’s childcare crisis, but with expansions to eligibility, the Department of Education can offer fiscal, workforce assistance to an industry in distress.
The Department of Education’s Barrier to Expanding Loan-Forgiveness Eligibility: Administrative Burden
Optimistically, the Department of Education is aware of childcare teachers’ undercompensation and, palpably, of the CCRAA’s statutory content. Indeed, on July 13, 2022, the department published proposed regulations and, as is customary, called upon experts to answer an inquiry: should early educators in for-profit programs receive PSLF? According to the DOE, expanding the definition of “qualifying employer” would “align regulations with the statutory intent of the PSLF Program.” Since publishing the inquiry, childcare providers and scholars of policy have encouraged the department to relieve all early childhood teachers of student debt. Why, then, has the DOE, despite seemingly agreeing with public sentiment, not yet rewritten its regulations? To understand its hesitations, an overview of PSLF’s eligibility-determination process is necessary.
An application for student loan forgiveness requires myriad distinct identifiers: a borrower’s social security number (SSN), an employer’s name, and most importantly, an Employer Identification Number (EIN). Much like private citizens are assigned unique SSNs, the Internal Revenue Service (IRS) bestows upon most businesses a unique differentiator—the EIN. How, then, does the Department of Education determine if an applicant is eligible for PSLF? More specifically, how does the DOE ensure an applicant is, actually, a public servant, at least under the department’s current definition of a “qualifying employer”? The department visits the IRS’s website and downloads the Exempt Organizations Business Master File (EO BMF), which contains the EINs of all nonprofits. Because a borrower’s application contains their employer’s EIN, the department cross-checks the EIN provided in the application with its IRS-supplied database. If successful, the procedure confirms an educator’s employment at a nonprofit program and therefore their eligibility for student loan cancellation.
Crucial to the application-review process, the IRS’s EO BMF enables the efficient verification of applicants’ employment. However, EINs assigned to for-profit employers are missing from the EO BMF and, more concerning, from any publicly accessible database. If tomorrow, the department classifies for-profit childcare programs as “qualifying employers,” verifying an educator’s employment at such a program would still be necessary. Without a database, however, the DOE cannot cross-check the EINs supplied by the applicant. Instead, staff would need to scrutinize an applicant’s evidence of employment, on a case-by-case basis: calling childcare centers to ensure an applicant is hired, sifting through proof-of-hire forms, and more. Unsurprisingly, if additions to the eligible employee base require DOE staff to make individual determinations of eligibility, then the loan-forgiveness program would be “impossible” to administer, at least according to the department.
Language from a June 20, 2024 Request for Information (RFI) reveals the department’s requisites: “Are there … sources [of for-profit childcare provider’s numerical identifiers] that the Department might consider using for determinations of qualifying employers?” To be sure, the department desires a comparable database to the EO BMF. In the absence of such sources, expansions to PSLF eligibility would necessarily be expansions to staff’s administrative responsibilities.
A Public Response to the Department of Education’s Hesitation and the Way Forward
Unless childcare scholars provide sources of for-profit employers’ distinguishers to populate its “qualifying employers” database, the department will not discharge the student debt of all early educators. I present a public response to the department’s 2024 RFI: a compilation of data sources to make feasible, under the recommended eligibility expansions, the administration of PSLF.
If the Department of Education were to incorporate the EINs of for-profit entities into an internal database, virtually all employees in the U.S. would be eligible, no less to a McKinsey consultant than to a childcare teacher. Nonetheless, the IRS has the data necessary to specifically identify for-profit early-education providers. Countless industries possess a unique North American Industry Classification System (NAICS) code, among them childcare. Various tax returns require the filer to identify their business’s industry with a NAICS code or, as the IRS terms it, a “Principal Business Activity Code.” Preserved by the IRS, the income-tax returns of sole proprietors, multimember LLCs, C corporations, and S corporations associate a business with its unique EIN and with its industry’s code. Indeed, to develop a list of would-be qualifying providers, the department can solicit, from the IRS, the EINs of all for-profit entities under the NAICS code for childcare services. The DOE’s request, irritating at best, would require the IRS to dig through all necessary filings and extract those with the appropriate code. Fulfilling such a request would be an onerous—but not impossible—project, and one surely worthwhile.
If the Department of Education seeks to widen eligibility only for those in licensed and regulated programs, a preference indicated in the 2024 RFI, it may turn to state-specific databases and the childcare licensing numbers within them. The Child Care and Development Block Grant, a formula grant distributed to states, tribes, and territories to subsidize childcare for low-income families, requires states to designate a “lead agency,” one which administers a Child Care Assistance Program (CCAP). Each agency publishes for parents the state’s childcare offerings, often in a publicly accessible database. New York’s Office of Children and Family Services (OCFS), the state’s CCAP-administering agency, publicizes a database of all licensed and regulated childcare providers and their state-conferred Enrollment IDs. Generally, in New York, childcare centers and larger home-based providers must have an Enrollment ID. To obtain for-profit programs’ unique identifiers, the DOE can extract childcare licensing numbers from the databases of each state’s lead agency. Then, the department can require early educators to provide their employer’s licensing number in the PSLF application. To determine an applicant’s eligibility, a cross-check would ensue, not unlike the one currently conducted by the department’s staff.
Myriad limitations exist, however, to states’ databases. In New York, license-exempt providers—home-based providers serving a small number of children and certain center-based programs—are not required to register with the OCFS, unless such providers elect to participate in the CCAP. Thus, the OCFS’s database lacks Enrollment IDs for countless small home-based programs. Deeming only licensed and regulated providers “qualifying employers” would construct another frivolous boundary in access to student debt cancellation, now between small and large home-based providers. Razor-thin profit margins characterize the ledgers of all family childcare programs, irrespective of the program’s size. When appending the “qualifying employers” list with program-specific licensing numbers, the Department of Education must proceed cautiously, for license-exempt providers will then largely be ineligible. Lead agencies’ databases remain imperfect, with even some licensed and regulated providers absent.
Although a patchwork, the aforementioned sources of for-profit childcare’s unique identifiers would enable the Department of Education to seamlessly verify an applicant’s “qualifying employment.” With cross-checks preserved and fears of administrative burden assuaged, the DOE must no longer stall. Its capricious eligibility determinations for PSLF must expand, if not because such definitions of “qualifying employer” entirely disregard the CCRAA’s statutory language, then because they deprive the childcare workforce of a public assistance they are entitled to and in need of.
Jorge Hernandez-Perez (CC ’25) is a columnist majoring in ethnicity and race studies, with a concentration in statistics. As a research intern for Brookings’ Center for Universal Education, he is conducting a desk review of Latin America’s childcare policies.