Updated 10/15/20

TEACH Grants and Eligibility of 

Faith-Based Entities to Participate in Title IV, HEA Programs

Summary of the Final Rule

Eligibility of Faith-Based Institutions

In light of the recent United States Supreme Court decision in Trinity Lutheran Church of Columbia, Inc. v. 

Comer1 and the United States Attorney General’s October 7, 2017, Memorandum on Federal Law Protections 

for Religious Liberty pursuant to Executive Order No. 13798,

2 the Department revises the existing regulations 

regarding the eligibility of faith-based entities to participate in the Federal Student Aid programs authorized 

under title IV of the Higher Education Act of 1965, as amended, and the eligibility of students to obtain certain 

benefits under those programs. The existing regulations could be interpreted to discriminate against otherwise 

eligible students and faith-based entities by disqualifying them from title IV, HEA programs solely because of 

their religious beliefs or status, in violation of the Free Exercise Clause of the First Amendment to the United 

States Constitution. The revisions guard against such discrimination and make clear that title IV, HEA programs 

remain available to all eligible entities without singling out persons and institutions of faith for unequal burdens 

and treatment. 

Need for Regulatory Reform

In Trinity Lutheran, the Supreme Court held that laws and policies which provide public benefits in a way that 

is “neutral and generally applicable without regard to religion” do not offend the First Amendment, but policies 

that “single out the religious for disfavored treatment” violate the Free Exercise Clause. The Free Exercise 

Clause “‘protect[s] religious observers against unequal treatment’” and “guard[s] against the government’s 

imposition of ‘special disabilities on the basis of religious views or religious status.’” Accordingly, the 

government cannot categorically exclude faith-based entities from a neutral and generally available government 

benefit program.

Additionally, the Attorney General’s Memorandum provides that “individuals and organizations do not give up 

their religious-liberty protections by providing or receiving social services, education, or healthcare.” For 

example, the government may not “deny religious schools—including schools whose curricula and activities 

include religious elements—the right to participate in a voucher program.” The Attorney General admonishes 

executive agencies not “to discriminate against religious organizations in their contracting or grant-making 

activities” but to give “[r]eligious organizations . . . the opportunity to compete for government grants or 

contracts and participate in government programs on an equal basis with nonreligious organizations.”

In accordance with the Supreme Court’s holding in Trinity Lutheran and the Attorney General’s Memorandum 

on Federal Law Protections for Religious Liberty, the Department’s revisions affirm that eligible students or 

faith-based entities need not disavow their religious beliefs or status to participate in title IV, HEA programs.

Significant Policy Changes

These regulations provide greater clarity to ensure that institutions with a faith-based mission and individuals do 

not give up their religious-liberty protections when participating in Federal Student Aid programs and the 

GEAR UP program. The regulations also level the playing field to ensure that institutions are not barred from 

competing for GEAR UP grants simply because they may have a religious mission. In particular, the 

regulations would:

1 137 S. Ct. 2012 (2017).

2 U.S. Att’y Gen. Memorandum on Federal Law Protections for Religious Liberty (Oct. 6, 2017) (hereinafter “Mem.”), 

https://www.justice.gov/opa/press-release/file/1001891/download.
Updated 10/15/20

• Eliminate the presumption that members of religious orders have no need for funding in certain 

circumstances under the Federal Pell Grant Program, the Federal Perkins Loan Program, the 

Federal Work-Study Program (FWSP), the Federal Supplemental Educational Opportunity Grant 

(FSEOG) Program, the Federal Family Education Loan (FFEL) Program, and the William D. 

Ford Federal Direct Loan (Direct Loan) Program;

• Allow borrowers working as full-time volunteers to defer repayment of Federal Perkins Loans, 

National Defense Student Loans (NDSLs), and FFELs in certain circumstances, if those 

borrowers also engage in giving religious instruction, conducting worship services, engaging in 

religious proselytizing, or engaging in fundraising to support religious activities as part of their 

assigned volunteer duties;

• Permit borrowers who work for employers that engage in religious instruction, worship services, 

or proselytizing to qualify for Public Service Loan Forgiveness so long as they meet the 

applicable standards, including for full-time employment and the organization’s tax status; and

• Eliminate arbitrary limitations on the ability of postsecondary faith-based educational institutions 

to participate in the Gaining Early Awareness and Readiness for Undergraduate Programs 

(GEAR UP) and ensure equal treatment of faith-based and secular secondary institutions that 

participate in the program.

Separately, the final regulations on accreditation and State authorization effective July 1, 2020, affirm that 

accreditors must respect the mission of an institution of higher education that includes, refers to, or is predicated 

upon religious tenets, beliefs, or teachings.

In response to public comment, the Department has further improved the regulation by:

• Specifying a narrow definition of sectarian instruction with regard to employment opportunities for 

Federal Work Study recipients to ensure alignment with congressional intent and alignment with the 

Religious Freedom Restoration Act.

• Ensuring consistent treatment of loan deferments across loan programs, including Public Service Loan 

Forgiveness.

TEACH Grant Program

The TEACH Grant program was established in 2007 to increase the number of teachers serving in high-need 

fields in low-income schools. The program provides a grant of up to $4,000 for each year in which an 

undergraduate or graduate student is enrolled in an eligible program that prepares him or her to teach in a highneed area in a high-need school, and regardless of the number of grants received, the recipient is required to 

teach for a total of four years out of eight in a high-need subject in a high-need school, as defined by the 

Nationwide List3

. Grant recipients who leave a qualifying program and do not intend to fulfill the service 

obligation, who do not meet the requirements of fulfilling the obligation, or who do not complete the required 

certifications of intent and employment by their respective deadlines have their TEACH grants converted to 

unsubsidized loans, with interest applied back to the date of disbursement of the grant.

Need for Regulatory Reform

In 2015, a GAO report found that approximately 36,000 out of more than 112,000 TEACH Grant recipients had 

not fulfilled the requirements of the program and, as a result, had their grants converted to loans. The report 

also found that 2,252 TEACH Grants were improperly converted to loans as of 2014. In 2018, the American 

Institutes for Research (AIR) found that 63 percent of TEACH Grant recipients who began their required eightyear service obligation before July 2014 had their grants converted to unsubsidized loans because they did not 

meet the annual service obligation or certification requirements. Borrowers reported confusion about the 

3 Department’s annual Teacher Shortage Area Nationwide Listing (Nationwide List).
Updated 10/15/20

program’s service obligation as well as the requirements and timelines for certification of employment. Further, 

the Department’s current regulations lack sufficient provisions to permit a borrower’s request for 

reconsideration of the conversion from a grant to a loan, or to correct an improper conversion as identified by 

the Department. 

In 2018-2019, the Department implemented corrective action to restore to the correct status those grants that 

were improperly converted to loans, and to restore time to those recipients to complete the service obligation

following correction of the error. These regulations codify those changes that further simply the process to 

document that a recipient is meeting or has met the required service obligation, and they also expand the fields 

in which a grant recipient can teach in fulfillment of the service obligation to include all elementary school 

teachers, and not just those who are reading or English as a Second Language (ESL) specialists, if elementary 

school teachers are included in the Nationwide List as a shortage area.

Significant Policy Changes

The regulations expand the fields in which grant recipients can work to fulfill their service obligation, simplify 

the employment certification requirements, require more information to be provided to recipients as part of 

entrance and exit counseling, create conversion counseling to education borrowers when their grants convert to 

loans, and provide processes to correct improver conversions of TEACH grants to loans. In particular, the 

regulations would:

• Define the term “highly qualified” as it refers to teaching assignments that fulfill the service 

obligation and to clarify inconsistencies in current law;

• Clarify and expand the conditions under which a TEACH Grant recipient may satisfy the TEACH 

Grant service obligation when teaching in a high-need field to include elementary school teachers if 

listed in the Department’s annual Teacher Shortage Area Nationwide Listing (Nationwide List);

• Clarify the service obligation requirements for TEACH Grant recipients who withdraw from the 

institution where they received a TEACH Grant before completing the program for which they 

received the grant, then later re-enroll in the same program or in a different TEACH Grant eligible 

program at the same academic level;

• Expand and amend the information that is provided to TEACH Grant recipients during initial, 

subsequent, and exit counseling, and add a new conversion counseling requirement for grant 

recipients whose TEACH Grants are converted to Direct Unsubsidized Loans;

• Add new conditions under which a TEACH Grant recipient may receive a temporary suspension of 

the eight-year period for completing the service obligation;

• Remove the current regulatory requirement for TEACH Grant recipients to certify, within 120 days 

of completing the program for which they received TEACH Grants, that they have begun qualifying 

teaching service, or that they have not yet begun teaching, but they intend to satisfy the service 

obligation;

• Simplify the regulations specifying the conditions under which TEACH Grants are converted to 

Direct Unsubsidized Loans so that for all grant recipients, loan conversion will occur only if the 

recipient asks the Secretary to convert his or her TEACH Grants to loans, or if the recipient fails to 

begin or maintain qualifying teaching service within a timeframe that would allow the recipient to 

satisfy the service obligation within the eight-year service obligation period;

• Specify that the Secretary will send grant recipients, at least annually, a notice containing detailed 

information about the TEACH Grant service obligation requirements, a summary of the grant 

recipient’s progress toward satisfying the service obligation, and an explanation of the process by 

which a grant recipient whose TEACH Grants are converted to Direct Unsubsidized Loans may 

request reconsideration of the conversion if he or she believes that the grants were converted in 

error;

• Describe the actions that the Secretary will take if a grant recipient’s request for reconsideration of 

the conversion of the grant to a loan is approved or denied; and
Updated 10/15/20

• Specify that the Secretary will notify a grant recipient in advance of the date by which he or she will 

be subject to loan conversion for failure to begin or maintain qualifying teaching service within a 

timeframe that would allow the recipient to complete the service obligation within the eight-year 

service obligation period, and inform the recipient of the final date by which he or she must provide 

documentation of teaching service to avoid having his or her grants converted to loans. 

In response to public comment, the Department has further improved the regulation by:

• Ensuring TEACH Grant recipients who have had their grant improperly converted to a loan will be 

given additional time (eight years minus the number of full academic years of qualifying teaching that 

the recipient had already completed) to complete the remainder of their service.

• Requiring automatic notification to a TEACH Grant recipient if their grant is converted to a loan in 

error.

• Providing additional flexibility to TEACH Grant recipients to reconvert a loan back to a grant if they 

initially requested conversion to a loan, but their life circumstances have changed and they now intend 

to meet the service obligation. This will further help the nation address teacher shortage areas.

The Secretary is using her authority to allow voluntary early implementation of these regulations to ensure the 

changes can benefit those affected as soon as possible.