TEACH grant converted to a loan? You may be eligible for a reversal.

  • Teachers whose federal grants were erroneously converted to loans will have a chance to plead their case following a recent announcement by the Education Department that it will accept requests for reconsideration.

    Teachers whose federal grants were erroneously converted to loans will have a chance to plead their case following a recent announcement by the Education Department that it will accept requests for reconsideration. Getty Images

 
 

Teachers whose federal grants were erroneously converted to loans will have a chance to plead their case following a recent announcement by the Education Department that it will accept requests for reconsideration.

The federal agency announced plans in December to review the files of participants in the Teacher Education Assistance for College and Higher Education Grant program, widely known as TEACH. The program provides money to students willing to work in high-needs schools or teach high-needs subjects for at least four of their first eight years out of college. Teachers must submit paperwork verifying eligible employment; otherwise, their grant will be converted to a federal loan that must be repaid with interest.

Educators have complained of having their grants converted as a result of paperwork snags, missed certification deadlines or receiving incorrect information from FedLoan Servicing, the company that oversees the program for the government. Those who believe their grant awards were incorrectly turned into loans can now apply to have the debt revert to a grant and to receive a refund for payments erroneously made on the loan.

To qualify, award recipients must have completed the required four years of service or be working toward that. The Education Department has begun identifying people potentially eligible to have their cases reconsidered and will email them next week to apply. Teachers who do not receive an email but believe they are eligible can still submit requests for a review of their files, according to the department.

Applicants must contact FedLoan expressing interest in having their loan revert to a grant and may need to submit documentation proving they have met requirements of the program. The loan servicing company will inform teachers if their requests are approved.

The Education Department said it has identified about 16,000 award recipients who are within the eight-year window to fulfill their teaching requirement and may qualify. In some cases, educators were on track to meet the teaching requirements but missed the deadline to certify their employment. Those teachers will have their debt automatically revert to grants, according to the department.

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To avoid future certification snags, the Education Department will standardize the certification deadline, instead of having individual deadlines.

Problems in the TEACH grant program surfaced in a 2015 report from the Government Accountability Office, which found that the grants of 2,252 recipients were mistakenly converted to loans from August 2013 through September 2014 under a previous servicing company, ACS.

GAO researchers said 56 percent of the erroneous conversions occurred because the servicer failed to give recipients 30 days from the final notification to certify their employment. Education officials assigned much of the blame to ACS, while FedLoan said it was manually reviewing all accounts flagged for conversion to mitigate the problem. Most of the people had their loans turned back to grants within six months and were refunded a total of $196,000, according to the report.

But records obtained by the consumer advocacy group Public Citizen show that erroneous conversions are far more widespread than the GAO found. According to a document the Education Department provided the group, FedLoan identified more than 15,000 grants it suspected were converted in error by ACS.

Last year, the Education Department released a study on the TEACH program that found 63 percent of recipients who began their service before July 2014 had their grants converted to loans. Of that population, 32 percent said they were on track to meet the program requirements or had already completed them, and so should not have been converted to a loan. The survey failed to investigate why those recipients' grants had been converted to loans.

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