Higher Education:

Better Management of Federal Grant and Loan Forgiveness Programs for Teachers Needed to Improve Participant Outcomes

GAO-15-314: Published: Feb 24, 2015. Publicly Released: Mar 26, 2015.

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Jacqueline M. Nowicki
(617) 788-0580
nowickij@gao.gov

 

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What GAO Found

More than 410,000 students and teachers have participated in financial aid programs for teachers over the past decade, though GAO estimates 0.8 and 19 percent of the potentially eligible population participates in the Stafford Teacher Loan Forgiveness and Teacher Education Assistance for College and Higher Education (TEACH) Grant programs, respectively. GAO did not develop an estimate for Perkins Loan Teacher Cancellation because U.S. Department of Education (Education) budget documents indicate that federal funds for cancellations were last appropriated in fiscal year 2009. About 36,000 of the TEACH Grant's more than 112,000 recipients have not fulfilled grant requirements, according to GAO's analysis of servicer data, and have had their grants converted to loans, known as grant-to-loan conversions, as required by regulation. Education has a stated goal to take a data-driven approach to better understand its customers, but does not collect information on why recipients do not meet requirements. Absent this data, Education is hindered in taking steps to reduce grant-to-loan conversions and improve participant outcomes.

Key benefits of the TEACH Grant and the two loan forgiveness programs are helping to recruit needed teachers and helping teachers pay for their education, while key challenges include participants' lack of knowledge about the programs' requirements, according to GAO's focus groups with college officials and interviews with other stakeholders. Regarding challenges, college officials said TEACH recipients may have difficulty finding and keeping an eligible teaching position and that annual certification requirements are confusing. GAO's review of data from Education's Federal Student Aid Ombudsman corroborates these challenges: 64 percent of the 212 requests for TEACH assistance from October 2011 through March 2014 cited problems submitting certification paperwork. Further, some college administrators said a key reason their schools do not participate in the program is the grant-to-loan conversion issue.

Education tracks participation in all three programs, but lacks clear, consistent guidance to help recipients understand the TEACH grant-to-loan conversion dispute process. As of September 2014, GAO's analysis of TEACH servicer data shows that 2,252 grants were erroneously converted to loans. Education officials said they now monitor the servicer more closely and plan to review all of the nearly 36,000 of the program's grant-to-loan conversions, but the agency has not systemically reviewed the cause of the errors. Federal internal control standards emphasize ongoing monitoring and absent a review, Education lacks reasonable assurance that it has taken steps to minimize future erroneous conversions. Education established a dispute process to address concerns about TEACH grants converted to loans in error; however, GAO found that Education and the servicer provide incomplete and inconsistent information to recipients about the availability of and criteria for disputing conversions. This is inconsistent with federal internal control standards that highlight effective external communication. Absent clear and complete information, recipients are unlikely to understand the dispute process. Education also has not established performance measures for the three programs nor used available data to systematically evaluate them. Managing for results includes setting meaningful performance goals and measuring progress toward them. Absent those, Education is unlikely to be able to use data to improve program administration and participant outcomes.

Why GAO Did This Study

Education estimates 430,000 new teachers will be needed by 2020. It administers three programs that may help attract and retain qualified teachers by helping them finance their education. However, little is known about the efficacy of these programs. GAO was asked to examine the TEACH Grant and two loan forgiveness programs.

This report examines (1) the number of current and potential participants in the three teacher aid programs and the extent to which TEACH Grant recipients satisfy grant requirements; (2) what selected schools, teachers, and students identified as benefits and challenges of program participation; and (3) the extent to which Education has taken steps to effectively manage and evaluate these programs. GAO reviewed applicable federal laws, regulations, and documents; analyzed participation data for the past decade; and interviewed stakeholders including agency officials, loan servicers, and students. GAO also held eight non-generalizable focus groups with officials from 58 colleges representing a range of sizes. GAO also reviewed Ombudsman data covering the former and current TEACH Grant servicers from October 2011 to March 2014.

What GAO Recommends

GAO recommends, among other things, that Education assess TEACH Grant participants' failure to meet grant requirements, examine why erroneous TEACH grant-to-loan conversions occurred, disseminate information on the TEACH grant-to-loan dispute process, and establish program performance measures. Education agreed with GAO's recommendations.

For more information, contact Jacqueline M. Nowicki, at (617) 788-0580 or nowickij@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: Education noted that Federal Student Aid disseminates information about these programs through various channels, such as its website, social media, and materials posted to the Financial Aid Took Kit. Annual in-person training is also provided, as well as online guidance on these programs to Financial Aid Officers at Title IV institutions. Education will assess the effectiveness of these sources of program information and seek input from interested organizations outside the agency on ways to better publicize and promote the progress. They will also develop and implement additional outreach efforts and vehicles to more effectively raise awareness both among current and incoming students and, for loan forgiveness among potentially eligible individuals who have already entered the workforce. We will close this recommendation when these efforts are completed.

    Recommendation: To enhance participation in and strengthen management of federal student aid programs for teachers, the Secretary of Education should direct Federal Student Aid's Chief Operating Officer to explore and implement ways to raise awareness about the TEACH Grant and the loan forgiveness programs.

    Agency Affected: Department of Education

  2. Status: Open

    Comments: In FY 2015, the Department of Education (Education) developed a survey for institutions that offer the Teacher Education Assistance for College and Higher Education (TEACH) Grant and grant recipients to assess program issues and challenges. According to documentation posted in the Federal Register, the surveys will be administered in 2016 and will be used as part of a study to improve TEACH Grant program administration. Education has also indicated it is developing plans to analyze existing data on TEACH grant recipients and institutions. We will close the recommendation when the study is complete and Education has examined ways to address the challenges identified.

    Recommendation: To enhance participation in and strengthen management of federal student aid programs for teachers, the Secretary of Education should direct Federal Student Aid's Chief Operating Officer to take steps to determine why participants are not able to meet TEACH Grant service requirements and examine ways to address those challenges.

    Agency Affected: Department of Education

  3. Status: Open

    Comments: Education noted it has already taken steps to implement this recommendation, such as a comprehensive assessment to identify the causes of the conversions and the grants affected. After identifying the reasons, they worked with current grant services to ensure accuracy and make sure they understood program requirements. ED will also work with recipients to resolve issues related to grants that were converted in error. All active Direct Unsubsidized Stafford Loans that were converted from TEACH grants and not in default were transferred to FedLoan Servicing by December 2014.

    Recommendation: To enhance participation in and strengthen management of federal student aid programs for teachers, the Secretary of Education should direct Federal Student Aid's Chief Operating Officer to review the underlying cause of the known erroneous conversions to ensure steps Education has taken are sufficient to address the problem, and establish time frames for transferring the approximately 2,600 loan conversions currently with other loan servicers.

    Agency Affected: Department of Education

  4. Status: Open

    Comments: Education noted steps it has taken to address this recommendation. For example, the agency clarified the TEACH grant conversion dispute process, detailing the specific set of criteria under which FedLoan Servicing is authorized to convert loans back to grants. The agency reported that it will assess the current process for disseminating information on the dispute process to determine whether additional outreach or more extensive information is necessary to ensure that appropriate audiences have access to needed information. We will close this recommendation when this effort has been completed.

    Recommendation: To enhance participation in and strengthen management of federal student aid programs for teachers, the Secretary of Education should direct Federal Student Aid's Chief Operating Officer to review the TEACH grant-to-loan conversion dispute process and disseminate to appropriate audiences clear, consistent information on it, including that recipients have an option to dispute, how to initiate a dispute, and the specific criteria considered in the adjudicating process.

    Agency Affected: Department of Education

  5. Status: Open

    Comments: Education reported that it will convene a group to review program data, identify appropriate metrics for which supporting data are available, and establish baselines and targets for those metrics. The agency will then incorporate those metrics, baselines and targets into its ongoing program management and policy development processes. We will close this recommendation when these efforts have been completed.

    Recommendation: To enhance participation in and strengthen management of federal student aid programs for teachers, the Secretary of Education should direct Federal Student Aid's Chief Operating Officer to establish program performance measures for the TEACH Grant and the loan forgiveness programs to assess against established goals and to inform program administration.

    Agency Affected: Department of Education

 

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