Performance Scholarships Will
Help to Improve our Schools
By Larry LeDoux
April 05, 2010
The Governor's Performance Scholarship proposal would award substantial
postsecondary scholarships to Alaska students who take a challenging
curriculum in high school and meet thresholds for performance
on grades and tests. The scholarships would be used at Alaska
institutions, both technical and academic.
The goals are to increase rigor and graduation rates in high
school, give students a better foundation to enter and complete
postsecondary education, and place Alaskans in Alaska's high-skills,
The Governor's Performance Scholarships are an invitation to
excellence. They provide pathways for parents to participate
in their children's education. They challenge communities to
provide rigorous schools. Alaska needs this. We cannot continue
to do more of the same and expect different results.
Understandably, the proposal has raised debate about ways to
finance students' postsecondary education. In particular, Alaskans
who received benefits under the state's forgiveness program on
state education loans made before 1987 fondly remember that program.
However, to gauge that program's effectiveness one must look
beyond the anecdotal reports and personal experiences, and instead
examine the overall costs.
The basic facts are that between 1971 and 1987, state-funded
education loans were offered on extremely generous terms, including
0 percent interest while in school, 5 percent to 8 percent interest
while in repayment, and 50 percent debt discharge for those who
completed the funded education certificate or degree program
and then resided in Alaska for five years.
Even with those generous terms, only one in five Alaska borrowers
eventually qualified for this financial aid. Those dismal results
are, in and of themselves, an argument for supporting the Governor's
There is no evidence the loan forgiveness program improved Alaska's
high school or college graduation rates. Rather, for two primary
reasons, approximately 80 percent of borrowers did not qualify
for forgiveness: They either failed to graduate their program,
or they attended institutions outside of Alaska and did not return
to live in the state following completion of their education.
Additionally, unintended consequences of that generous program
included inadequately prepared students pursing postsecondary
education only to lack the skills to persist and succeed; over-borrowing
by students who assumed they would only have to pay half; and
loan default rates and write-offs that almost ending the program
in the mid-1990s.
Alaska is not the only state with less than exemplary results
with similarly structured loan forgiveness programs. Generally,
loan forgiveness and loan repayment programs are thought of as
strategies to mitigate or resolve labor shortages within a state.
A 2001 national review of relevant programs, Advantages and
Disadvantages of State loan Forgiveness and Loan Repayment Programs,
concluded that loan forgiveness programs were, relative to
outcomes, expensive to administer. The expense was due to the
need to track borrowers from origination through repayment, the
borrowers' entitlement to the benefit even if the state no longer
experiences a shortage in a particular workforce field, and the
cost of loan collection when recipients failed to qualify for
For its loan forgiveness program, Alaska invested more than $430
million in loans at an annual operating cost of $4 million to
$6 million, and we garnered a 20 percent return -- and we achieved
that result while requiring merely that graduates live in Alaska
for five years.
It is our judgment that a loan forgiveness program would not
meet the reform goals of a performance-based scholarship program.
We want our high school students to work hard at school, doing
more than the minimum to get by, because they view their education
as a way to meet their personal goals. We want school boards
and school districts to put in place a rigorous education wherever
students live, whether it's a city or a village.
Perhaps the Governor's Performance Scholarships' greatest value
is to empower families to feel ownership of their children's
About: Larry LeDoux is the Commission of the Alaska Department
of Education & Early Childhood Development.
Received April 02, 2010 - Published
April 05, 2010
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