New report on troubled federal grant program overseen by loan servicers

Yesterday Public Citizen issued a new report on the Department of Education’s mismanagement of the TEACH Grant program. The report is based on more than 2,400 pages of records we obtained through a Freedom of Information Act request, most of which we released for the first time yesterday. The report paints a dire picture of servicer error and government incompetence beyond anything reported previously with respect to the program.

The TEACH program gives federal grants to aspiring teachers in exchange for a commitment to work for four years in high-need schools and fields. If recipients don’t fulfill their service requirements or certain paperwork obligations, the grants convert to federal loans. A mind-boggling 63 percent of these grants convert, making their nickname—“groans”—an apt descriptor.

Among the program’s many problems, the Department and private student loan servicers it has hired to administer the program have converted some grants to loans in error or for minor paperwork missteps that do not reflect a recipient’s intention to abandon covered teaching service. Corrections have been slow to come, or in some instances have never occurred. The handling of the TEACH Grant program is now at issue in multi-district litigation in Pennsylvania.

Public Citizen’s report describes how the Department’s regulations have helped create the conversion crisis and recommends numerous changes in an upcoming 2019 rulemaking. It also documents new instances of mismanagement, including a finding that the Department did not stop collection efforts with respect to individuals whose grants were suspected to have been converted in error.

The report also explains why a recent Department announcement that the agency and FedLoan would “reconsider” some previous conversions does not go far enough to fix the many problems that ail the program.

You can find an executive summary, the full report, and many of the key FOIA documents here. You can find our full trove of FOIA records here.


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