NEW YORK (MainStreet) — What happens when your TEACH Grant from the Federal government becomes a student loan?
You've got a groan, not a grant.
That is what's happening to about one-third of some 112,000 students who have been awarded TEACH Grants by the Federal Department of Education (ED) but don't, for one reason or other, meet the terms of the program, causing their grants become loans that have to be re-paid, according to a report from the General Accountability Office (GAO). Chances are they'll be groaning all the way to the bank once they realize how much this could cost them. TEACH grants award those who want to be teachers up to $4,000 annually.
The Federal Student Aid website states that a "Teacher Education Assistance for College and Higher Education (TEACH) Grant is different from other federal student grants in that it requires you to take certain classes in order to get the grant and then do a certain kind of job to keep the grant from turning into a loan."
According to the FSA Website, TEACH Grant recipients must teach full time for four academic years within eight years of completing the program, work in a low-income school or education service agency as an ED-defined highly qualified teacher in a high-needs field. Those not meeting the requirements will find their TEACH grants converted to Direct Unsubsidized loans, with interest charged from the date of each TEACH grant disbursement.
The GAO's report, assembled in response to a request from Congress, is dated February 24 but was not released until last week and was signed by Jacqueline Nowicki, GAO director of Education, Workforce and Income Security. The GAO found that despite all the demands for data and the requirements of the grant recipients, information was not being collected that would help explain why TEACH Grant recipients have difficulty sticking with the program--especially when the alternative is watching their grants turn to loans.
"About 36,000 of the TEACH grant's more than 112,000 recipients have not fulfilled grant requirements, according to GAO's focus groups with college official and interviews with other stakeholders," the GAO said.
What's more the GAO's analysis of the data coming from TEACH Grant servicers, which are paid by ED, found that 2,252 grants had been mistakenly converted to loans as of September, 2014. The GAO report stated that ED “now monitor(s) the servicer more closely and plan(s) to review all of the nearly 36,000 of the program's grant-to-loan conversions, but the agency has not systematically reviewed the cause of the errors.” Stakeholders contacted by the GAO said finding a qualifying job and accurately completing TEACH grant paperwork were major stumbling blocks.
The GAO recommends that, "among other things, that ED assess TEACH Grant participants' failure to meet grant requirements examine why erroneous TEACH grant-to-loan conversions occurred."
The recommendations, also signed off on by the GAO's Nowicki, noted that ED "agreed with GAO's recommendations."
Meanwhile, some 430,000 new teachers will be needed by 2020 according to ED's own estimates.
--Written by John Sandman for MainStreet