States Step Up: Vermont and Massachusetts Launch Student-Loan Repayment Programs for Early Childhood Educators

Nikita Lenahan always knew she wanted to work in early childhood education, but paying for college was a major worry. After financing her degrees with student loans, she opened Bambino University, a nature-based childcare program in Proctorsville, Vermont, in 2022. The program thrived, but roughly $35,000 in student debt remained a heavy burden.

Lenahan later learned about Vermont’s Student Loan Repayment Assistance Program for Early Childhood Educators and applied. She received $4,000 that first year and described the application process as "incredibly easy," crediting the Vermont Association for the Education of Young Children (VTAEYC) staff for their support. She subsequently received three more annual $4,000 awards, which helped reduce her debt while she returned to school to earn a master’s degree and begin doctoral work. "It’s been heaven-sent," she said, urging her staff to apply as well.

How Vermont’s Program Works

Created by the state legislature in 2021 and first issuing reimbursements in 2022, Vermont’s program provides up to $4,000 per year to full-time early childhood educators who hold an early-childhood-related degree. According to Beth Wallace, VTAEYC’s director of engagement, Vermont has issued more than 275 awards totaling over $1.8 million; the combined student-loan balance held by awardees exceeds $9 million.

Eligibility requires a degree in early childhood education or a related field and an individual income below $60,000 per year (VTAEYC is considering recommending an increase to that limit). Initially limited to associate and bachelor’s degree holders, the benefit was expanded in 2023 to include master’s degrees. Loans from bachelor’s programs account for over 60% of the awards. Recipients may have attended school out of state, but they must intend to work at a licensed center, home-based childcare program, or Head Start site in Vermont for 12 months.

Massachusetts’ Larger-Scale Launch

Massachusetts launched its own student-loan repayment program for early childhood educators in 2026 with a larger per-person award: up to $7,500 per year. The program received more than 400 applications in its inaugural round; review and award notifications are underway. Massachusetts funded the initiative with a one-time $15 million appropriation from the 2025 state budget.

Massachusetts applies different eligibility criteria: priority goes to educators who work in communities serving children and families with high needs or in regions with shortages of early care slots. The state requires that the loans originate from a Massachusetts institution and that recipients live in Massachusetts and agree to remain in their role for an additional year after receiving the award. Unlike Vermont, which issues checks to educators, Massachusetts pays funds directly to loan servicers.

Experts: Loan Repayment Is A Retention Tool

Amy Kershaw, commissioner of the Massachusetts Department of Early Education and Care, said the program targets educators who already are in the field and feel financial pressure from student debt—those the state hopes to retain. Curran McSwigan, deputy director of the economic program at the think tank Third Way, notes that childcare workers carry debt levels similar to other professionals but face lower wages, making that debt a heavier burden. "It becomes a much larger burden," she said.

“Student-loan repayment can help address financial barriers, but it works best alongside apprenticeships, tuition assistance, scholarships and steady, year-to-year funding,” said Beth Wallace of VTAEYC.

Funding And Longevity Concerns

Observers emphasize that loan-repayment programs are most effective when combined with broader supports for educator compensation and training. Experts warn that one-time appropriations can create short-term relief but pose sustainability risks; stable annual funding is needed to ensure these programs aren't cut in future budget cycles.

For Vermont, the program is administered through the state Child Development Division with an annual budget of roughly $600,000; Vermont accessed American Rescue Plan funds for the program’s first two years, Heather Martin, VTAEYC’s director of analytics and impact, explained. Massachusetts’ $15 million appropriation provides a strong initial investment, but long-term success will depend on ongoing budget commitments and complementary workforce supports.

Bottom Line

Both states are experimenting with targeted loan-repayment strategies to retain experienced early childhood educators. Vermont offers a modest, easy-to-access reimbursement aimed at keeping teachers in-state, while Massachusetts offers larger awards with residency and in-state loan requirements and a significant upfront budget. Policymakers and advocates say these programs can help reduce financial pressure and improve retention—if paired with sustainable funding and broader workforce development efforts.