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TEACH Grant Program Plagued by Mismanagement, Inadequate Oversight

Dec. 10, 2018

TEACH Grant Program Plagued by Mismanagement, Inadequate Oversight

More Rule Changes Are Necessary to Help Teachers, Public Citizen Report Shows

WASHINGTON, D.C. – TEACH Grant rules at the U.S. Department of Education encouraging grant-to-loan conversions are having a devastating effect on teachers’ financial lives, according to a report (PDF) Public Citizen released today.

The report demonstrates that the TEACH Grant program is rife with mismanagement and inadequate oversight and shows how the department’s regulations have needlessly exacerbated grant-to-loan conversions, leaving recipients with punishing debt.

“The Education Department must change its regulations to eliminate known barriers to keeping teachers in the program and to ensure that teachers previously harmed by the program are made whole,” said Julie Murray, the Public Citizen attorney who authored the report. “The department’s announcement today that it will change paperwork requirements and reconsider some previous conversions does not go nearly far enough to fix the program’s woes.”

Congress established the TEACH Grant program in 2007 to provide federal grants of up to $4,000 a year to aspiring teachers pursuing higher education. Students who receive the grants must agree to teach in high-need fields and schools for at least four of eight years following their course of study. If grant recipients do not complete their service or fail to fulfill certain paperwork requirements, their grants convert to federal direct loans that must be repaid with interest. To date, more than 112,000 students have received TEACH Grants.

Since the TEACH Grant program began, however, 63 percent of all grants have converted to federal loans. As a result, many recipients find themselves with unexpected and substantial debt.

Too often, conversion of TEACH Grants to loans should be entirely avoidable. Some occur even when teachers fulfill the service requirements. The conversions result from mistakes by the Department of Education and by private student loan servicers hired to oversee the program, or because of paperwork mishaps.

Public Citizen’s report provides new details on how the department’s paperwork requirements for continued participation in the program are tripping up teachers. It describes how the department failed to secure required approval of the forms by the U.S. Office of Management and Budget, which is responsible for ensuring that forms are useful and understandable. The department’s unlawful action calls into question the legality of thousands of grant-to-loan conversions based on recipients’ failure to complete the forms.

The report also explains why an Education Department announcement on Sunday regarding the agency’s plan to reconsider some previous conversions offers only a limited – and temporary – fix. It describes the actions that the department must take to fix the program regulations and come into compliance with the law.

Today, along with its report, Public Citizen also is releasing hundreds of pages of previously undisclosed records obtained from the Education Department through a Freedom of Information Act request. Those records further document problems within the TEACH Grant program and show how the agency has stood in the way of change.

One document shows that among the more than 11,000 conversion disputes, more than a quarter took five months or more to resolve, leaving teachers’ financial lives in limbo. This finding, among others, indicates that robust oversight of the department’s changes to the program is necessary to ensure efficient and effective relief from erroneous or otherwise avoidable grant-to-loan conversions.