NAICU Washington Update

Education Department Addressing TEACH Grant-to-Loan Conversions

December 21, 2018

After years of confusion because of a poorly crafted law, negative reports from the Government Accountability Office, and complaints from Congress, the U. S. Department of Education has agreed to reimburse teachers whose TEACH (Teacher Education Assistance for College and Higher Education) grants were inadvertently turned into loans.

According to an alert issued by the Department, it expects to provide more detail on next steps by the end of January.  The alert reads, in part:

“ED is finalizing a process that will provide an opportunity for certain TEACH Grant recipients whose TEACH Grants were converted to Direct Unsubsidized Loans to request reconsideration of the conversions. You will be able to request a reconsideration if you met or are meeting the TEACH Grant service requirements within the eight-year service obligation period, but had your grants converted to loans because you did not comply with the annual certification requirement. Once we complete our process work, we plan to update this page by Jan. 31, 2019, with instructions on how to apply for reconsideration of your converted TEACH Grants.”

Roughly 12,000 recipients have found their grants converted to loans because of certification, paperwork, and other administrative errors.  According to reporting by NPR, the servicing contractor for the Department has been inflexible when grantees have appealed the conversion to loans, and thousands of teachers have been burdened with unexpected loan payments.

TEACH grants were created in 2007 to provide up to $4,000 in grant aid to students pursuing a teaching degree. As a reward for service program, TEACH grants are administratively cumbersome, but have been an effective recruiting tool for teachers for low-income schools.  TEACH grant recipients must agree to teach as a highly qualified teacher, full-time, in a high-need field, at a low-income school for at least four of the eight years after completing their degrees. Teachers must certify with the Department annually regarding this service.  If teachers do not meet the service requirements, the grant amounts received convert into a Direct Unsubsidized Loan that must be repaid in full with interest.

Because teaching in a low-income school usually comes with a low salary, teachers with converted grants are often struggling to make loan payments. The new guidance should alleviate the need for these teachers to repay loans they did not expect to have.

MORE News from NAICU