Watch Out: TEACH grants are the new debt trap

The Teacher Education Assistance for College and Higher Education (TEACH) Grant Program was established by Congress under the College Cost Reduction and Access Act, to benefit current and prospective teachers. This new grant is available as of the 2008-09 school year. It provides $4,000 per year to students willing to commit (as recent high school graduates) to earning a degree in education and then going to teach full-time for 4 years in high-poverty schools in a specific subject area.

On the face of it this looks like a good program-- incentives for more individuals to become teachers, teach in low-income communities, financial assistance that does not have to be repaid, etc.

But beware: If a student does not fulfill the terms of the grant it is automatically converted into an unsubsidized loan, with interest accruing starting when the loan began.

One can easily imagine many ways a student could fail to fulfill the terms of the grant.
Here are but a few examples:

1. The 18 year old student might change her mind about becoming a teacher (all you have to do to be eligible is to "plan on completing coursework necessary to begin a career in teaching")

2. She might not be admitted to a school of education. This is easy to imagine at a school like UW-Madison, where our admissions occur only after a student begins college and are quite competitive.

3. She might not succeed in the program (you have to maintain a 3.25 GPA each semester)

4. She might not find an appropriate teaching job in her local area and thus be forced to move away from home, or even out-of-state. (There is a clause for this: "There are, however, graduate degree alternatives for teachers or retirees with experience in a teacher shortage area" but the options aren't spelled out)

5. Once she's teaching, she could be laid off (new teachers are especially vulnerable to this).

6. The school at which she's teaching might change in composition, such that it is no longer considered "high-poverty." (It seems the criteria will be based on % free lunch)

For these reasons and many more, the student's "grant" of up to $16K might suddenly become an unsubsidized loan amounting to far more with interest included (something along the lines of $40K over a 10 year period).

Yet to sign up for the program the student only signs a simple form-- since it's not a loan there is no promissory note clearly spelling out terms and conditions. This is thus not like a loan forgiveness program.

We should be very concerned about the potential impacts of this highly misleading program on uninformed students. We should be especially concerned because the U.S. Department of Education knows, and it explicit about knowing-- and expecting-- that fully 80% of those receiving the TEACH grant will fail to meet its requirements and therefore have their "grant" turned into an unsubsidized loan!

Here is the text from the federal regs:

"As discussed elsewhere in this preamble, program cost estimates reflect data on recent college graduates entering eligible teaching fields, adjusted for the percentage of students who graduate, maintain a 3.25 grade-point-average and take out a Federal loan. (In the absence of any need-based eligibility criteria, Federal borrowing was used as a proxy for unmet financial need.) Data from longitudinal studies were used to estimate the percentage of recipients who graduated from college, were highly qualified, and taught in high poverty schools for four out of the eight years following graduation. Based on this data, the Department assumed _*80 percent of recipients *_will eventually fail to fulfill their service requirements and have their grants converted into Federal Direct Unsubsidized Stafford Loans."

The Teacher Education Assistance for College and Higher Education (TEACH) Grant Program and Other Federal Student Aid Programs; Proposed Rule
[Federal Register: March 21, 2008 (Volume 73, Number 56)]


At this point, the legislation has been approved and the Secretary of Education is taking comments on the proposed federal regulations.

While grants are more attractive to students than loans, there is nothing more destructive than false promises. This needs to be retooled--quickly--into a loan forgiveness program.

Spread the word.