Report: Confusion Over Service Requirements Causes Teachers to Lose Grants

By Allie Bidwell, NASFAA Senior Reporter

Thousands of college students who received grants contingent upon teaching in high-need fields and schools may have had their grants converted to loans due to misunderstandings about annual certification requirements, or processing issues with providing the annual certification, according to a new internal study from the Department of Education (ED).

First reported by NPR, the study shows that nearly two-thirds of grant recipients (63 percent) who began their service requirement prior to July 2014 ultimately had their Teacher Education Assistance for College and Higher Education (TEACH) Grants converted into unsubsidized loans. And among those TEACH Grant recipients who had their grants converted into loans, about one-third (32 percent) said they did not understand the service requirements. Nearly another 1 in 5 said they did not know about the annual certification process, 13 percent said they faced challenges with the certification process, and 9 percent said they forgot about the annual certification requirement.

The study came after a 2015 Government Accountability Office (GAO) report found many grant recipients did not meet the requirements. That study also noted challenges with knowledge about the program service requirements, and confusion around the certification requirements. Overall, the GAO found 64 percent of requests for assistance from October 2011 through March 2014 were related to submitting certification paperwork. It also found that 2,252 recipients had their grants erroneously converted to loans from August 2013 through September 2014.

In its story, NPR quoted two grant recipients who had their grants converted to loans due to processing issues with their annual certifications. One grant recipient, Maggie Webb, told NPR she never received the recertification paperwork from FedLoan Servicing, the contracted federal loan servicer that manages both the TEACH Grant and Public Service Loan Forgiveness (PSLF) programs. By the time the issue was resolved, she said, it was too late—her paperwork was submitted by the deadline, she said, but the servicer said it did not receive it.

Another recipient, David West, told NPR that he accidentally submitted an incomplete certification form. Although he corrected the form and sent in a completed one, it was past the deadline.

FedLoan Servicing, which is operated by the Pennsylvania Higher Education Assistance Agency (PHEAA), has come under fire from at least one state attorney general for issues related to loan repayment processing. Massachusetts Attorney General Maura Healey in August filed a lawsuit against PHEAA, claiming the agency caused some borrowers and grant recipients to lose their benefits. With respect to those with TEACH Grants, the lawsuit claimed PHEAA's actions have caused grants to be converted to loans. According to the lawsuit, PHEAA has not processed teachers' annual certification forms properly and in a timely manner, and does not give individuals enough time to make changes to their forms, if necessary. As a result, some teachers' grants are being converted to loans.

PHEAA disputed the allegations in the lawsuit, saying in a statement at the time that though it refuted the lawsuit's claims, "PHEAA remains committed to appropriately resolving any outstanding borrower issues while following the U.S. Department of Education’s policies, procedures, and regulations as mandated by the Agency’s federal contracts" and will work with ED's Office of Federal Student Aid (FSA) "to help resolve any issue identified by the Massachusetts Attorney General."

According to the new ED study, part of the issue appears to stem from a lack of understanding about the service requirements tied to receiving a TEACH Grant. Of those grant recipients who had their grants converted to loans, 35 percent said they were somewhat or not informed about the service requirement when obtaining their first grant. By comparison, just 13 percent of recipients still in grant status answered similarly.

Additionally, more than 1 in 5 of the recipients in loan status (21 percent) said they were not informed about the annual certification requirement. Another 31 percent said they were just somewhat informed. Those recipients still in grant status, however, were much more likely to say they were informed about the requirement—just 5 percent said they were not informed, and 19 percent said they were only somewhat informed. Nearly half (46 percent) said they were well informed.

ED also surveyed institutions about their administration of TEACH Grants. According to the survey, financial aid staff at six of the seven institutions that had financial aid staff interviewed for case studies said they counseled students about the requirements tied to the grant, both in person and online. College of education staff interviewed at seven of nine institutions said they also informed students about the grant requirements through events or courses through the college.

Overall, ED sent surveys to 472 institutions of higher education that awarded TEACH Grants to at least 10 recipients in the 2014-15 award year. About two-thirds (65 percent) said their financial aid offices provided integrated (TEACH Grants and financial aid broadly) optional in-person counseling. More than half (56 percent) said their financial aid offices provided stand-alone optional in-person counseling on the TEACH Grant program. This is in addition to mandatory counseling TEACH Grant recipients must complete each year from ED.

ED said in its summary of the study that it had collected the information "to better understand institutional practices in implementing the grant program, including how institutions promote awareness of the program and how they support grant recipients as students complete their teacher education programs and obtain employment."


Publication Date: 3/29/2018

Michelle C | 4/3/2018 5:11:31 PM

This is really sad and unfortunate. But for those of us around when the TEACH grant first came out it's not a surprise. Many conversations were had around the country about the balance between more money for students and the feeling like we were a party to "bait and switch" aid or a "groan" (grant that turns into a loan). We have congress to blame for the complicated nature of the program. Knowing my fellow aid colleagues I have no doubt that aid administrators did their best to caution students about the program. I say, no matter the deadlines, if a student has graduated and is working in the prescribed manner - give them the credit - this is where the spirit of the program is far more important than the nominal income from loan interest when it magically turns into a loan.

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