Ahead of Neg Reg Sessions, ED Proposes Changes to TEACH Grant Loans Conversion Process

By Joelle Fredman, NASFAA Staff Reporter and Megan Walter, Policy & Federal Relations Staff

In anticipation of the start of a series of subcommittee hearings next week on the Teacher Education Assistance for College and Higher Education (TEACH) Grant program—part of the negotiated rulemaking or “neg reg” process—the Department of Education (ED) released draft language that focuses on TEACH Grant conversions to loans, as well as documentation and counseling requirements.

The subcommittee sessions on TEACH Grants—which are not open to the public, but will be live streamed—will take place January 17-18, February 12-13, and conclude March 11-12. During these meetings, ED and subcommittee members will develop and recommend proposed rules for consideration by the larger negotiated rulemaking committee. The committee negotiates proposed rules with the goal of reaching consensus. ED will publish the proposed rule in the Federal Register as a Notice of Proposed Rulemaking (NPRM) and solicit public comments, which will be evaluated for inclusion in the final rule. Stay tuned to Today’s News next week for coverage of the discussion.  

The issue of TEACH Grant recipients having their grants converted into loans—and general confusion about how to satisfy program requirements—has been heavily reported in the last year. A March 2018 study—prepared for ED—that showed nearly two-thirds of grant recipients (63 percent) who began their service requirement prior to July 2014 ultimately had their TEACH Grants converted into unsubsidized loans. Additionally, 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, another 1 in 5 said they did not know about the annual certification process, and 13 percent said they faced challenges with the certification process.

Earlier, a 2015 report from the Government Accountability Office (GAO) found that 2,252 recipients had their grants erroneously converted to loans from August 2013 through September 2014 and 64 percent of requests for assistance from October 2011 through March 2014 were related to submitting certification paperwork.

NASFAA submitted comments to ED in September about the TEACH Grant program after ED announced its intention to rewrite the regulation. Specifically, NASFAA suggested that ED increase “flexibility on administrative processes and deadlines given the severity of the consequences for failure to comply,” create the ability for ED to correct errors in converting TEACH Grants to loans, and establish a simple process for recipients to dispute their loan conversions.

NASFAA also in November wrote to Education Secretary Betsy DeVos, alongside the Education Finance Council, asking her to change to the regulation to assist borrowers who had their grants erroneously converted into loans separately and ahead of the neg reg process.   

Last month, ED announced that it would grant some kind of relief to borrowers who had their TEACH Grants converted into loans and allow them to apply for reconsideration. ED wrote that it would have more information out on this effort by Jan. 31, 2019.    

In a departure from past negotiations, in which the first session has generally been a brainstorming and listening session, ED has already released its proposed draft regulatory language for the TEACH Grant program.

In the draft, ED proposed to drastically simplify the rules that would cause a student’s TEACH Grant to be converted into a Direct Unsubsidized loan by narrowing the regulatory language down to two situations—either recipients request that the TEACH Grant be converted into a loan because they have no intention of completing the required service for the grant, or recipients do not begin to fulfil their required service within a time frame that would allow them to complete the required four years within the 8-year limit.

ED also proposed to add to the regulation that during the service obligation period, ED will annually notify recipients of terms and conditions that outline their service requirements to maintain their grant status, as well as information in the case that their grant is being converted into a loan and how to appeal if they believe the conversion was an error. In a similar vein, ED proposed changing the title of the current “Agreement to Serve” document, which is required for every recipient, to “Agreement to Serve or Repay” to “emphasize that a grant recipient must either perform the service obligation or repay the grant as a loan.”

In addition to provisions focused on loan conversions, ED proposed to add the term “educational service agency” to the list of approved teaching sites to allow for a borrower to satisfy TEACH Grant requirements by teaching for an agency that serves low-income students. This provision would also allow borrowers fulfill the grant obligations while teaching at private schools serving low-income students.

ED also proposed new wording to be added to the regulation that would allow for less than one full year of teaching to be counted as one of the four years required at an elementary or secondary school if the borrower resided in or was employed in a federally-declared major disaster area.  

Finally, ED proposed a handful of additions to the current counseling requirements for TEACH Grant recipients. For example, ED proposed that recipients be informed during counseling that once their grant is converted into a loan it cannot be converted back into a grant unless it was done due to an error.

The three-day, public neg reg session on accreditation, in which ED is proposing changes to numerous provisions such as agency experience, accreditation standards, innovation waivers, and enforcement policies, will begin Monday. Subcommittee sessions on distance learning and educational innovation and faith-based entities—which are not open to the public, but will be live streamed—will also take place January 17-18, February 12-13, and conclude March 11-12. Stay tuned to Today’s News for coverage of what will be addressed during those sessions.


Publication Date: 1/9/2019

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