HIGHER EDUCATION

Better Management

of Federal Grant and 

Loan Forgiveness 

Programs for 

Teachers Needed to 

Improve Participant 

Outcomes

Report to Congressional Requesters

February 2015

GAO-15-314

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-15-314, a report to 

congressional requesters

February 2015

HIGHER EDUCATION

Better Management of Federal Grant and Loan 

Forgiveness Programs for Teachers Needed to

Improve 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 nongeneralizable 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.

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.

View GAO-15-314. For more information, 

contact Jacqueline M. Nowicki, (617) 788-

0580, nowickij@gao.gov.
Page i GAO-15-314 Financial Aid for Teachers

Letter 1

Background 6

Population Potentially Eligible for Teacher Aid Programs Far 

Exceeds Current Participation, and About One-Third of TEACH 

Grant Recipients Do Not Satisfy Grant Requirements 13

Stakeholders Noted Benefits of Teacher Aid Programs, but 

Students and Teachers Face Challenges Meeting and 

Understanding Requirements 20

Education Has Taken Steps to Improve Program Management, 

but Issues with TEACH Grant-to-Loan Conversions and 

Communication Remain 26

Conclusions 33

Recommendations for Executive Action 34

Agency Comments and Our Evaluation 34

Appendix I Objectives, Scope, and Methodology 36

Appendix II Comments from the U.S. Department of Education 45

Appendix III GAO Contact and Staff Acknowledgments 48

Tables

Table 1: Selected Characteristics of Three Teacher Aid Programs 8

Table 2: Conditions Under Which a Teacher Education Assistance 

for College and Higher Education (TEACH) Grant 

Converts to an Unsubsidized Direct Loan 10

Figures

Figure 1: Teacher Education Assistance for College and Higher 

Education (TEACH) Grant and Loan Forgiveness 

Programs Paperwork and Teaching Requirements 9

Figure 2: Teacher Education Assistance for College and Higher 

Education (TEACH) Grant Participants by Award Year 

(2009-2014) 14

Contents
Page ii GAO-15-314 Financial Aid for Teachers

Figure 3: Status of Teacher Education Assistance for College and 

Higher Education (TEACH) Grant Recipients as of 

October 2014 18

Figure 4: Self-Reported Reasons Why Teacher Education 

Assistance for College and Higher Education (TEACH) 

Grant Recipients Voluntarily Convert, August 2013 

through September 2014 19

Figure 5: Types of Errors Identified by Education and the Teacher 

Education Assistance for College and Higher Education 

(TEACH) Grant Servicer for the 2,252 Erroneous Grantto-Loan Conversions, August 2013 through September 

2014 28

Abbreviations

B&B Baccalaureate and Beyond Longitudinal Study

CFPB Consumer Financial Protection Bureau

Education U.S. Department of Education 

FSA Federal Student Aid 

IBR Income-Based Repayment

IPEDS Integrated Postsecondary Education Data System

NSLDS National Student Loan Data System

PSLF Public Service Loan Forgiveness 

SASS School and Staffing Survey

TEACH Teacher Education Assistance for College and 

Higher Education 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-15-314 Financial Aid for Teachers

441 G St. N.W.

Washington, DC 20548

February 24, 2015

The Honorable Thomas R. Carper

Ranking Member

Committee on Homeland Security and Governmental Affairs 

United States Senate

The Honorable Michael F. Bennet

United States Senate

The Honorable Christopher A. Coons

United States Senate

The Honorable Mark R. Warner

United States Senate

The U.S. Department of Education (Education) estimates the United 

States will need about 430,000 new elementary and secondary teachers 

by 2020, particularly in high-need subject areas such as mathematics, 

science, and special education. Education administers three programs 

that may help attract and retain qualified teachers, particularly in lowincome schools, where teacher turnover can be nearly 50 percent higher 

than in other schools, by helping prospective and current teachers finance 

college and graduate school.1 The Teacher Education Assistance for 

College and Higher Education (TEACH) Grant program, established by 

the College Cost Reduction and Access Act,2 is available to help pay for 

the cost of education for undergraduate and graduate students pursuing a 

teaching career in high-need subjects at low-income schools.3

 1

Ingersoll, R. M., “Teacher Turnover and Teacher Shortages: An Organizational Analysis,”

American Educational Research Journal, vol. 38, no. 499-534 (2001).

After 

graduation, teachers with Stafford or Perkins loans also may be eligible 

for loan forgiveness programs if they meet certain requirements, such as 

teaching for a certain number of years in a high-need subject or in a low2

Pub. L. No. 110-84, § 104, 121 Stat. 784, 786 (2007).

3

20 U.S.C. § 1070g et seq.
Page 2 GAO-15-314 Financial Aid for Teachers

income school.4

1. How many students and teachers are potentially eligible for and 

participate in the three teacher aid programs, and for the TEACH 

Grant program, to what extent are recipients satisfying grant 

requirements?

However, as little is known about participation in and the 

efficacy of these programs, you asked GAO to review them. This report 

addresses the following questions:

2. What have selected schools, teachers, and students identified as the 

benefits of and challenges with program participation?

3. To what extent has Education taken steps to effectively manage and 

evaluate these programs?

To assess participation in the TEACH Grant, Stafford Teacher Loan 

Forgiveness, and Perkins Loan Teacher Cancellation programs, we 

reviewed data from the National Student Loan Data System (NSLDS) 

from the last decade for the Stafford forgiveness and Perkins cancellation 

programs, and from school year 2008-2009 for the TEACH Grant—the 

year in which Education first awarded the grants.5 To determine the 

extent to which recipients were satisfying grant requirements, we 

assessed participation data from the TEACH Grant servicer, also 

beginning with school year 2008-2009 for the same reason.6

 4

The Stafford loan program is the largest source of federal financial aid available to 

postsecondary students and provides both need-based and non need-based aid to 

undergraduate and graduate students. Perkins loans are need-based fixed-rate loans for 

both undergraduate and graduate students with priority given to those with exceptional 

financial need. Perkins loans are made directly by schools using funds contributed by the 

federal government and participating institutions of higher education.

These data 

included information on the status of TEACH grant recipients such as the 

number of recipients still in school and those that started the service 

period. For those in the service period, we reviewed the number of 

recipients who have satisfied the grant requirements, those who had their 

grant converted to a loan, and those who were teaching or had certified 

intent to teach. We compared this and other information about the 

5

Education’s NSLDS is a comprehensive national database of student loans, borrowers, 

and other information. Education contracts with a loan servicer to administer much of the 

TEACH Grant program. 

6

The current TEACH Grant servicer services most active TEACH grants and grant-to-loan 

conversions awarded since school year 2008-2009. 
Page 3 GAO-15-314 Financial Aid for Teachers

TEACH Grant program to Education’s departmental and Federal Student 

Aid (FSA) specific strategic planning documents, which outline goals and 

objectives both for federal financial aid programs and teacher recruitment 

and retention. We developed estimates for the population potentially 

eligible for the TEACH Grant and Stafford Teacher Loan Forgiveness 

programs7 by analyzing data from Education’s Integrated Postsecondary 

Education Data System (IPEDS) 8 for the 2012-2013 school year and the 

Schools and Staffing Survey (SASS) for the 2011-2012 school year, the 

most recent years the data were available.9

To describe program benefits and challenges as identified by 

stakeholders, we conducted eight focus groups with college officials from 

58 colleges and universities—four with officials from institutions that 

offered the TEACH Grant program and four with officials from institutions 

that did not offer the program. We included college administrators from 

institutions that do and do not offer the TEACH Grant program, to gather 

a range of perspectives about how well these programs are working and 

why institutions chose not to participate.

We determined that NSLDS, 

TEACH Grant servicer, IPEDS, and SASS data are sufficiently reliable for 

the purposes of this report by testing it for accuracy and completeness, 

reviewing documentation about systems used to produce the data, and 

interviewing agency officials.

10

 7

We did not develop estimates for the Perkins Loan Teacher Cancellation program 

because, according to federal budget documents, Congress last appropriated funds for 

Perkins loan cancellations in 2009. 

We also conducted in-depth 

interviews with officials at four colleges participating in the TEACH Grant 

program, and individuals enrolled in or recently graduated from teacher 

training programs from 21 public and private colleges—over half of which 

8

Education’s IPEDS is a system of interrelated surveys conducted annually to gather 

information from each college, university, and technical or vocational institution that 

participates in federal student aid programs.

9

Education’s SASS, conducted every four years, is a system of questionnaires 

administered to teachers, principals, and school administrators that provide descriptive 

data on elementary and secondary education in the United States. Because this is a 

probability sample, estimates based on this survey are subject to sampling error. Unless 

otherwise noted, percentage estimates based on this survey have 95 percent confidence 

intervals within +/-5 percentage points of the estimate itself. 

10The focus groups were further stratified by the type of college administrator we 

interviewed: four of the focus groups included representatives from colleges of education 

and four included financial aid administrators. 
Page 4 GAO-15-314 Financial Aid for Teachers

offered the TEACH Grant program. We selected these schools and 

individuals to seek more in-depth information from administrators and 

potential participants about program awareness, benefits and challenges, 

if applicable, and further insight on why some schools and individuals 

chose not to participate. We also interviewed officials from seven higher 

education associations and organizations, and the two largest teacher 

unions on the benefits and challenges of these programs. We selected 

higher education associations and organizations representing a range of 

public and private degree granting institutions and organizations that 

represent colleges of education and financial aid administrators. While 

information obtained from our focus groups and interviews are not 

generalizable, they provide valuable insights from college administrators, 

students, and teachers about these programs. Additionally, we used data 

from Education’s 2012 Baccalaureate and Beyond (B&B) Longitudinal 

Study (follow-up to the 2008 survey)—the most recent available—to 

develop simulations of a typical teacher’s loan repayment and forgiveness 

options using average income and debt levels, and to highlight the 

challenges teachers face when making a range of choices about 

participating in and the interaction among various loan forgiveness 

programs.11 We also analyzed complaint data from Education’s FSA 

Ombudsman from the last three years—October 2011 through March 

2014—to learn more about challenges participants face and steps the 

agency takes to resolve them. We requested data covering this time 

period because it spanned both servicers that managed the TEACH 

Grant program.12

 11Education’s B&B Longitudinal Study examines students’ education and work 

experiences after they complete a bachelor’s degree, with a special emphasis on the 

experiences of new elementary and secondary teachers. Because this is a probability 

sample, estimates based on this survey are subject to sampling error. Unless otherwise 

noted, percentage estimates based on this survey have 95 percent confidence intervals 

within +/- 5 percentage points of the estimate itself. These simulations are intended for 

illustrative purposes only, as they do not incorporate the experiences of individual 

borrowers.

For the loan forgiveness programs, we reviewed a 

simple random sample of 100 customer requests out of a possible 825 

such requests the Ombudsman received during this time period. The loan 

forgiveness sample is generalizable to the population of requests. We 

determined that B&B and FSA Ombudsman data are sufficiently reliable 

for the purposes of this report. For B&B data, we reviewed documentation 

about systems used to produce the data and tested it for accuracy and 

12The current TEACH Grant servicer began servicing the program in July 2013. Prior to 

that, the program was administered by a different servicer. 
Page 5 GAO-15-314 Financial Aid for Teachers

completeness. For FSA Ombudsman data, we interviewed agency 

officials and reviewed documentation about systems used to produce the 

data.

To assess the extent to which Education has taken steps to effectively 

manage and evaluate these programs, we reviewed agency planning and 

guidance documents; servicer monitoring documents; and information 

provided to prospective and current participants; and compared them to 

federal internal control standards,13 GAO’s prior work on performance 

measurement and evaluation leading practices, and Education’s 

departmental and FSA specific strategic planning documents.14

We conducted this performance audit from November 2013 to February 

2015 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

To inform 

all of our objectives, we reviewed relevant federal laws, regulations, and 

documents, and interviewed officials with Education’s Office of 

Postsecondary Education; Office of Planning, Evaluation, and Policy 

Development; Budget Service Office, and FSA. We also interviewed 

officials from contracted loan servicing companies that administer aspects 

of the TEACH Grant and the Stafford and Perkins loan programs.

 13GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).

14GAO, Performance Measurement and Evaluation: Definitions and Relationships, 

GAO-11-646SP (Washington, DC: May 2011); Designing Evaluations: 2012 Revisions, 

GAO-12-208G (Washington, DC: January 2012); and Managing for Results: Executive 

Branch Should more Fully Implement the GPRA Modernization Act to Address Pressing 

Governance Challenges, GAO-13-518 (Washington, D.C.: June 2013).
Page 6 GAO-15-314 Financial Aid for Teachers

Education administers three programs—the TEACH Grant, Stafford 

Teacher Loan Forgiveness, and Perkins Loan Teacher Cancellation—that 

may help attract and retain high-quality teachers in high-need schools 

and subjects by helping teachers pay for school.

TEACH Grant. Individual colleges and universities elect whether to 

participate in the program and choose the grade levels and education 

programs in which students may receive the grant. Students participating 

in the TEACH Grant program may generally receive up to $4,000 a year15

while in school and must fulfill teaching service requirements after 

graduation or the grant converts to an unsubsidized Direct Loan.16

Stafford Teacher Loan Forgiveness. Teachers who teach for 5 

consecutive years in a low-income school can receive up to $5,000 in 

loan forgiveness or up to $17,500 if also teaching in certain subjects.17

Perkins Loan Teacher Cancellation. Eligible teachers can have up to 100 

percent of their Perkins loans cancelled over the course of 5 years of 

qualifying service.18 The maximum annual amount a student can borrow 

under the Perkins loan program is generally $5,500 for undergraduates 

and $8,000 for graduate and professional students.19

Table 1 describes program eligibility, service requirements, benefit 

amounts, and participating schools for these three programs, which are 

the subject of our review.

Teachers can also take advantage of a fourth program—the Public 

Service Loan Forgiveness (PSLF) program—which, because of its 

 15Undergraduate students may receive up to $16,000 total, and graduate students can 

receive up to $8,000 total.

16Additional student loan debt can affect borrowers differently depending on their 

circumstance. For example, some recipients whose TEACH grant converts to a loan may 

qualify for other loan forgiveness programs that could reduce their overall loan debt.

1720 U.S.C. §§ 1078-10, 1087j.

1820 U.S.C. § 1087ee.

19The maximum aggregate amount of unpaid principal is limited to $27,500 for 

undergraduates who have completed two years of study, and $60,000 for graduate 

students. These annual and aggregate limits can be exceeded by 20 percent in the case 

of certain study abroad programs.

Background
Page 7 GAO-15-314 Financial Aid for Teachers

program requirements, may have implications for teacher eligibility for 

and benefits under the Stafford Loan Forgiveness program. PSLF was 

enacted in 2007 and is meant to encourage individuals to enter and 

continue to work full-time in public service jobs, such as teaching, by 

offering loan forgiveness to qualified public service employees.20

 20Qualifying public service employment can include full-time jobs in emergency 

management, government, military service, public safety, law enforcement, public health, 

public education, social work, public library sciences, and employment at a not-for-profit 

organization that has been designated as tax-exempt by the Internal Revenue Service 

(IRS) under section 501(c)(3) of the Internal Revenue Code. 20 U.S.C. §

1087e(m)(3)(B)(i).
Page 8 GAO-15-314 Financial Aid for Teachers

Table 1: Selected Characteristics of Three Teacher Aid Programs

Programs

Teacher Education Assistance 

for College and Higher 

Education (TEACH) Grant

Stafford Teacher 

Loan Forgiveness 

Perkins Loan 

Teacher Cancellation 

Eligible 

Population

Undergraduate students pursuing coursework to 

become teachers and certain graduate students

Teachers in low-income 

schools

Teachers in low-income schools or 

certain subjectsb

Selected

Eligibility and 

Teaching 

Requirements

Be enrolled in a TEACH Grant-eligible program; 

cumulative grade point average of 3.25 or 

higher or a sufficient score on certain 

admissions tests; receive TEACH Grant-specific 

counseling; sign an Agreement to Serve; 

graduates teach for a total of 4 years out of 8 in 

a low-income school in a high-need subject 

area; eligible subjects include math, science, 

foreign language, bilingual education, English 

language acquisition, special education, reading 

specialist, or any other field documented as 

high need by the federal, state, or local 

educational agency, and approved by Education 

and listed in the Teacher Shortage Area 

Nationwide List (Teacher Shortage List)a

Teachers with eligible loans 

that teach consecutively fulltime for 5 years in a lowincome school; teacher 

receives additional benefits if 

also teaching certain 

subjects: special education 

(elementary and secondary), 

math and science 

(secondary)

Teachers with eligible loans that 

teach full-time in a low-income 

school; Head Startc teacher or early 

childhood educator; special 

education teacher; or teach the 

following subjects: math, science, 

foreign languages, bilingual 

education, or in any other field 

where the state educational agency 

determines there is a shortage of 

qualified teachers

Benefit 

Amounts

Undergraduates can receive up to $16,000; 

graduate students can receive up to $8,000

Up to $5,000 of Stafford loan 

forgiven; up to $17,500 (total) 

forgiven if also teaching in 

certain subjects

Undergraduates can generally 

receive up to $5,500 annually; 

graduate students can generally 

receive up to $8,000 annually. 

Borrowers can receive up to 100% 

of Perkins loan cancelled (over the 

course of 5 years)d

15% for the 1st/2nd years

20% for the 3rd/4th years

30% for the 5th year

Participating 

Schools

Approximately 800 colleges and universities 

opted to participate for school year 2013-2014. 

Participating college and universities have 

awarded over $593 million since the first awards 

were made in school year 2008-2009. 

All eligible institutions that 

enter into a participation 

agreement with Education 

can participate in the Stafford 

Loan program. In fiscal year 

2014, Education provided 

almost $100 billion to eligible 

students through subsidized 

and unsubsidized loans.

Approximately 1,500 colleges and 

universities opted to participate in 

the Perkins Loan program during 

school year 2013-2014. In fiscal 

year 2014, participating colleges 

and universities provided borrowers 

who demonstrated financial need 

with Perkins loans totaling 

approximately $1.2 billion. 

Source: GAO analysis of relevant federal laws and regulations governing the TEACH Grant and the loan forgiveness programs and U.S. Department of Education documentation. | GAO-15-314

a Education and states use the annual Teacher Shortage List to highlight teaching fields where there 

is an inadequate supply of teachers.

b Perkins borrowers are eligible for loan cancellation for certain other types of qualifying employment 

or service such as nursing, child and family services, law enforcement, and active duty military 

service, among others.

c The Head Start program provides child development services primarily to low-income families and 

their children.

d Full-time Head Start teachers or early childhood educators receive 15 percent of their Perkins loans 

cancelled per year of qualifying service.
Page 9 GAO-15-314 Financial Aid for Teachers

To benefit from these three programs, grant recipients and borrowers 

must periodically submit paperwork that verifies eligible employment (see 

fig. 1).

Figure 1: Teacher Education Assistance for College and Higher Education (TEACH) Grant and Loan Forgiveness Programs

Paperwork and Teaching Requirements

Note: TEACH Grant recipients must certify they are teaching or plan to teach every year until they 

complete the 4 years of required teaching. TEACH Grant recipients have 8 years to satisfy the 

teaching requirement.

Until their service requirement is fulfilled, TEACH grant recipients are 

required—per an Agreement to Serve that they sign when in school—to 

annually certify that they intend to teach or that they are currently 

teaching in a qualified position and school, otherwise their grant will 

Paperwork Requirements
Page 10 GAO-15-314 Financial Aid for Teachers

convert to an unsubsidized Direct Loan.21 If that happens, the grant 

recipient must pay back the full amount of the grant award, plus interest, 

which is calculated from the date the TEACH grant was disbursed (see 

table 2).22

Table 2: Conditions Under Which a Teacher Education Assistance for College and Higher Education (TEACH) Grant Converts 

to an Unsubsidized Direct Loan 

TEACH grant recipients have up to 8 years to complete service 

requirements.

1. A grant recipient voluntarily requests their TEACH grant be converted to a loan because they decide not to teach, or not to teach 

in a qualified school or subject, or for any other reason.

2. A grant recipient ceases enrollment in the institution prior to completing the TEACH Grant-eligible program and within 120 days 

fails to provide notice that they are teaching or plan to teach in accordance with the Agreement to Serve.

3. Within 1 year of ceasing enrollment prior to completing the TEACH Grant-eligible program, the grant will convert unless the grant 

recipient is eligible for suspension, has re-enrolled in an eligible program, or has begun qualifying teaching. 

4. A grant recipient completes an eligible course of study, but does not actively confirm (at least annually) an intention to satisfy the 

Agreement to Serve.

5. A grant recipient does not complete 4 qualifying academic years of service within the 8-year period, or begin such service in time 

to do so.

Source: GAO analysis of TEACH Grant regulations. | GAO-15-314

Stafford borrowers are required by regulation to submit documentation 

once at the end of their 5-year service period when they apply for the 

benefit.23

 21The Agreement to Serve sets out the terms and conditions of the grant. 

Unlike Stafford borrowers who submit only one application for 

22In some circumstances TEACH Grant service obligations can be cancelled, suspended, 

or discharged. TEACH Grant cancellation occurs when a grant recipient no longer wishes 

to participate and returns the award amount soon after disbursement. A suspension can 

occur for recipients who have completed or otherwise ceased enrollment in a TEACH 

Grant-eligible program 1) if a recipient enrolls in a program for which he or she would be 

eligible for a TEACH grant or a program determined by a state to meet the requirements 

for certification or licensure to teach in that state, 2) has a condition that is a qualifying 

reason for leave under the Family and Medical Leave Act, or 3) is called to active military 

service for more than 30 days. Education will discharge a TEACH grant if a participant 

dies or becomes permanently disabled.

2334 C.F.R. §§ 682.216(f) and 685.217(e). For each year of qualifying teaching, Stafford 

borrowers are also eligible to apply for teacher loan forbearance. During forbearance, a 

Stafford borrower can stop or reduce their monthly payment during the service period; 

however, interest continues to accrue.
Page 11 GAO-15-314 Financial Aid for Teachers

loan forgiveness, Perkins borrowers must apply for a portion of their loan 

to be cancelled for each year of qualifying service.24

The TEACH Grant and the loan forgiveness programs are administered 

by FSA. For all three programs, FSA develops policies and regulations, 

provides oversight, and monitors compliance by participants, including 

schools, financial entities, loan servicers, and students. FSA is also 

responsible for outreach on how to apply for and receive aid. Additionally, 

FSA is to develop borrower guidance and maintain StudentAid.gov—a 

centralized source for information about federal student aid programs—to 

help borrowers and grant recipients understand the repayment process 

and the terms and conditions of the programs. In 1998, the FSA 

Ombudsman was established to resolve complaints from student loan 

borrowers and to make recommendations for improving service within 

FSA. According to FSA’s 2014 annual report, the Ombudsman has 

received more than 300,000 customer contacts since it began operations 

in 1999.

FSA contracts with loan servicers to assist in administering the TEACH 

Grant and Stafford loan programs. These loan servicers are independent 

entities that provide billing and repayment services, inform borrowers 

about their repayment options, and respond to customer service inquiries. 

Much of the TEACH Grant program is administered by a single servicer 

who manages all active grants and most grants that have been converted 

to loans.25

 24Participating schools are to automatically defer Perkins loans during periods when the 

borrower is performing qualifying teaching service. During deferment, a borrower is not 

required to make payments and interest does not accrue. 

Among other duties, the servicer is to remind grant recipients 

when their employment certification paperwork is due and send quarterly 

interest notices informing grant recipients of the amount they would owe, 

including interest, if their grant were to convert to a loan. A borrower’s 

Stafford loans are serviced by 1 of 11 FSA-contracted companies. Among 

other duties, Stafford servicers process applications for forbearance and 

loan forgiveness once a borrower has completed their service obligation. 

25TEACH grants awarded to 2,655 recipients that have converted to loans were disbursed 

to other federal loan servicers. 

Education’s Role in 

Administering Financial 

Aid Programs for Teachers
Page 12 GAO-15-314 Financial Aid for Teachers

Servicers review applications for eligibility and forward recommendations 

for approval to FSA for final review.26

In contrast, while FSA is responsible for overall management of the

Perkins loan program, it is campus-based and administered directly by 

participating schools. Perkins loans are made directly by schools using a 

combination of federal and institutional funds, and borrowers repay these 

loans to their school.27 Therefore, staff of participating colleges and 

universities are generally responsible for determining eligibility, 

processing applications for benefits and loan deferment, disbursing 

benefits and collecting repayments, and advising and providing technical 

assistance to borrowers, among other responsibilities.

 26According to FSA officials, borrowers may be denied loan forgiveness if their submitted 

applications are incomplete or if they did not teach in an eligible subject or school. If 

denied, teachers can submit corrected paperwork or reapply.

27The institutional contribution must match a portion of the federal contribution. According 

to Education budget documents, federal contributions for Perkins loan cancellation 

benefits are authorized to be made available through discretionary appropriations. While 

federal funding was last appropriated for Perkins loan cancellation reimbursements to 

participating schools in fiscal year 2009, according to Education data, schools have 

continued to cancel loans for qualified borrowers. Under current law, for academic years 

ending after September 30, 2015, no new Federal Perkins loans will be issued to 

students. 
Page 13 GAO-15-314 Financial Aid for Teachers

About one-fourth of the more than 410,000 teacher aid recipients 

benefited from TEACH grants. Between school year 2008-2009, when 

TEACH grants were first awarded, and October 2014, more than 112,000 

students were awarded grants from participating colleges and 

universities, according to National Student Loan Data System (NSLDS) 

figures.28 While TEACH Grant participation is decreasing for both 

undergraduates and graduates, participation rates among graduate 

students are declining at a slightly higher rate, falling 17 percent since 

award year 2011 (see fig. 2).29

 28Participants can receive multiple TEACH Grant awards.

Education conducts analysis for internal 

purposes, but it has not assessed program participation, including why 

participation is declining, as part of any evaluation or study as discussed 

later in the report.

29The TEACH Grant award year roughly mirrors an academic year. For example, award 

year 2009 was July 1, 2008, through June 30, 2009.

Population Potentially 

Eligible for Teacher 

Aid Programs Far 

Exceeds Current 

Participation, and 

About One-Third of 

TEACH Grant 

Recipients Do Not 

Satisfy Grant 

Requirements

More Than 410,000 

Students and Teachers 

Received TEACH Grants 

or Loan Forgiveness and 

More Could Be Eligible
Page 14 GAO-15-314 Financial Aid for Teachers

Figure 2: Teacher Education Assistance for College and Higher Education (TEACH) 

Grant Participants by Award Year (2009-2014)

Note: Education tracks TEACH Grant participation by award year. As TEACH grant recipients can 

receive awards in multiple years, the total number of participants shown in Figure 2 will not match the 

total count of unique recipients since award year 2009 (112,338).

About three-fourths of the more than 410,000 teacher aid recipients have 

received loan forgiveness or cancellation. Over the past decade, more 

than 298,000 teachers have participated in the Stafford Teacher Loan 

Forgiveness and the Perkins Loan Teacher Cancellation programs. 

Participation in the Stafford Teacher Loan Forgiveness program has 

increased each year, benefiting 53 times more participants in fiscal year 

2014 than in fiscal year 2004. In contrast, participation in the Perkins 

Loan Teacher Cancellation program has decreased significantly—69 

percent since fiscal year 2004. The steady decrease from fiscal years 
Page 15 GAO-15-314 Financial Aid for Teachers

2011 through 2014 may be due at least in part to a lapse in funding.30

As no estimates exist of the potentially eligible populations for the TEACH 

Grant and Stafford Teacher Loan Forgiveness programs, we developed 

estimates by reviewing program requirements and information on 

students and teachers from the Integrated Postsecondary Education Data 

System (IPEDS) and the School and Staffing Survey (SASS).

For 

example, according to Education budget documents, Congress last 

appropriated federal reimbursements to participating schools for Perkins 

loan cancellations in fiscal year 2009.

31 We 

estimated that 19 percent and 0.8 percent of the potentially eligible 

population for the TEACH Grant and Stafford Teacher Loan Forgiveness 

programs, respectively, are benefiting from these programs. For the 

TEACH Grant program, we estimated that in school year 2012-2013 

approximately 188,000 students graduated or completed a potentially 

eligible program from participating schools32 and 36,326 students (19 

percent) received grants.33

 30Trends in the loan forgiveness and cancellation programs generally track trends in the 

Stafford and Perkins loan programs. According to our review of data from The College 

Board, from academic years 2004 to 2013 the overall number of subsidized and 

unsubsidized Stafford borrowers has increased by 52 percent from 6.5 million to 9.9 

million. Over that same time period, the number of Perkins borrowers has decreased by 

34 percent from 756,000 to 502,000. The College Board, Trends in Higher Education 

Series: Trends in Student Aid 2014, (New York, NY: 2014).

For the Stafford program, we estimated that in 

school year 2011-2012 approximately 3.4 million teachers taught in lowincome schools, however some of those teachers may not have eligible 

31We did not develop estimates for the Perkins Loan Teacher Cancellation program 

because, according to Education budget documents, Congress last appropriated funds for 

Perkins loan cancellations in fiscal year 2009. 

32We analyzed Education data on schools offering TEACH grants to their students during 

academic year 2013-2014. Using IPEDs data, we obtained the number of students who 

graduated from these schools in academic year 2012-2013—the most recent data 

available—with qualifying bachelors or masters degrees or those who completed 

qualifying post-baccalaureate teacher training programs. In total, we identified 96 

potentially eligible academic program types including general education and secondary 

education teaching programs as well as education programs with a concentration in math, 

science, and special education based on fields specifically listed in federal law. However, 

because participating colleges and universities have discretion to choose which programs 

are eligible, we may not have included all eligible graduates or included some that were 

not eligible. A more detailed description of our analysis can be found in Appendix I. 

33Key reasons why the potentially eligible population may be less than the total amount of 

students enrolled include: colleges and universities sometimes restrict participation; and 

some potentially eligible students may not meet the program’s GPA requirement.
Page 16 GAO-15-314 Financial Aid for Teachers

loans or may not yet have taught the required 5 years to receive Stafford 

loan forgiveness.34 According to Education’s data, 27,023 teachers 

benefited from the program in fiscal year 2012, representing 0.8 percent 

of the estimated 3.4 million teachers in low-income schools that year.35

For more information on our methodology, see Appendix I.

Participation in the TEACH Grant and the loan forgiveness programs 

might be higher if more teachers and students were aware of them, 

according to college administrators in our focus groups, students, and 

other stakeholders we interviewed. For example, officials from one higher 

education association said that awareness of these programs is low and 

that Education does not promote them to potentially eligible students and 

teachers. While college administrators in all four of our focus groups with 

officials from schools that offer the grants said that colleges inform 

students about the TEACH Grant, typically in advising or recruiting 

sessions or by speaking directly with qualifying students, more than half 

of the 23 students and recent graduates we interviewed said they 

received little to no information about the grant, including 9 who attended 

schools that offered the program. Awareness of the loan forgiveness 

programs appears to be similarly limited. Officials from both teacher 

unions, and 6 of 23 students and recent graduates we interviewed, cited a 

lack of awareness about teacher loan forgiveness programs. For 

example, one recent graduate said she did not know that her Perkins loan 

could have been cancelled until she had already paid it off. Participants in 

two of the four focus groups that contained financial aid officers also said 

that students may not be aware that a Perkins loan can be cancelled.

Education officials stated that they provide information on the TEACH 

Grant and the loan forgiveness programs online and through loan 

servicers who are in contact with participants during repayment. 

 34The Stafford forgiveness program is only available to a borrower who has no 

outstanding loan balance under the Federal Family Education Loan Program or the Direct 

Loan Program on October 1, 1998, or who has no outstanding loan balance on the date 

he or she obtains a loan after October 1, 1998. 34 C.F.R. §§ 682.216 and 685.217.

35According to our analysis of SASS data, about 3.4 million teachers taught in low-income 

schools during the 2011-2012 school year. This estimate includes all teachers regardless 

of how long they have taught and therefore may include some not yet eligible for loan 

forgiveness. We obtained data on the number of teachers who received Stafford Teacher 

Loan Forgiveness in fiscal year 2012 from Education’s NSLDS. For more information, see 

Appendix I. 

Lack of Awareness 

About Programs May 

Affect Participation
Page 17 GAO-15-314 Financial Aid for Teachers

Specifically, Education officials said that students are made aware of 

these programs via resources such as:

• its website (StudentAid.gov);

• the master promissory note all students sign when applying for a loan; 

and

• exit counseling, which is conducted by schools when students 

graduate.

Education requires institutions and lenders to provide certain information 

at various intervals throughout the loan repayment process. Further, while 

the Stafford loan servicers we interviewed said they are not required to 

advertise loan forgiveness programs, they provide program information to 

borrowers on their websites.

While Education makes information on these programs available, 

awareness among potential participants continues to be a challenge, 

according to college administrators in our focus groups, students, and 

other stakeholders we interviewed. Education’s FSA has a stated goal to 

actively inform all eligible individuals of their funding options. However, a 

senior Education official contended that conducting outreach to promote 

these programs to students and teachers may be difficult because the 

agency does not capture information on who is teaching and therefore is 

unaware of teachers who may be eligible. Another senior Education 

official noted that while Education is responsible for awarding student 

loans, colleges and teachers’ workplaces also have a role in informing 

borrowers about these programs. Nevertheless, senior Education officials 

stated that they will continue to consider ways to increase awareness of 

teacher loan forgiveness benefits. In the absence of additional outreach 

about all three teacher aid programs, however, students and teachers 

may be unaware of opportunities to receive financial assistance, and 

Education may be missing opportunities to expand the pool of highly 

qualified teachers, particularly for low-income schools where retention 

has been a challenge.

While most TEACH grant recipients are still enrolled in an eligible teacher 

training program or otherwise are fulfilling requirements, about one-third 

of recipients have had their grants converted to unsubsidized Direct 

Loans because they did not satisfy requirements or requested their grant 

be converted, according to data from the TEACH grant servicer (see fig. 

3). According to servicer data from August 1, 2013—when the servicer 

Many TEACH Grant 

Recipients Do Not Satisfy 

Requirements and Must 

Repay Their Grants
Page 18 GAO-15-314 Financial Aid for Teachers

began tracking this information—through September 30, 2014, 

approximately 86 percent of the 12,648 recipients who had their grants 

converted to loans during this time frame were involuntary conversions—

that is, initiated by the TEACH Grant servicer. Involuntary conversions 

occur because recipients do not meet grant requirements, such as not 

teaching in a qualified school or subject or not submitting required 

documentation verifying eligible employment. The remaining 

approximately 14 percent of these recipients voluntarily requested that 

their grants be converted to loans. According to servicing officials, 

recipients voluntarily requested conversions primarily because they no 

longer intended to teach or were not teaching in an eligible school or 

subject area.

Figure 3: Status of Teacher Education Assistance for College and Higher Education 

(TEACH) Grant Recipients as of October 2014

Note: Other category includes 1,387 recipients who completed teaching requirements. The remainder 

either had their grants suspended, discharged, or cancelled. TEACH grant recipients will move in and 

out of different status categories over time. For instance, upon graduation, a participant typically 

moves from in school to teaching or intend to teach.

Despite the significant number of recipients who have not met TEACH 

Grant requirements, Education has not taken steps, such as conducting 

studies or evaluations, to determine why recipients are not successfully 

completing the program. Officials said they conduct analysis for internal 

purposes, but said the TEACH Grant program is too new and data is 
Page 19 GAO-15-314 Financial Aid for Teachers

insufficient for an accurate and beneficial formal evaluation or study. 

However, Education could leverage existing data or collect new 

information to illuminate the challenges recipients face in meeting 

requirements. For example, the TEACH Grant servicer asks all recipients 

who voluntarily convert online to provide information on why they chose to 

do so (see fig. 4). Analyzing this type of information could better position 

Education to make informed decisions about how it might wish to address 

these challenges.

Figure 4: Self-Reported Reasons Why Teacher Education Assistance for College 

and Higher Education (TEACH) Grant Recipients Voluntarily Convert, August 2013 

through September 2014

The servicer also tracks some information on conversions that it initiates, 

such as when a recipient does not respond to certification requests or 

submits an incomplete certification form. However, the servicer does not 

collect information as to the underlying reasons why a recipient does not 

certify. Without collecting this type of information, the servicer and 

Education are limited in understanding challenges recipients face meeting 

grant requirements and taking steps, to the extent possible, to improve 

their experience. Further, Education has a stated goal to take a datadriven approach to better understand its customers and has made 

teacher recruitment and retention a priority. However, absent data to 

better understand these issues, it will be difficult for Education to improve 
Page 20 GAO-15-314 Financial Aid for Teachers

student and teacher outcomes and it is likely missing opportunities to 

broaden the pool of highly qualified teachers available to teach in highneed subjects and high-need schools.

The TEACH Grant and the loan forgiveness programs provide benefits to 

students, teachers, and colleges, according to college administrators in 

our focus groups, as well as students and other stakeholders we 

interviewed. These benefits include:

• Helping to recruit teachers, particularly to low-income schools.

College administrators in half of our focus groups with colleges and 

universities that offer the TEACH Grant (two of four) said the program 

helps them recruit students. One focus group participant noted that 

the grant program may be particularly beneficial for education 

programs struggling to attract students. Additionally, college 

administrators in three of these four focus groups said the program 

helps recruit graduates to teach at low-income schools.

• Helping students pay for school. Officials from more than half of the 

higher education associations we interviewed (four of seven), and 

officials from both teacher unions said that the TEACH Grant program 

benefits students by helping them fund their education. The loan 

forgiveness programs can also reduce student loan debt because a 

portion of that debt is forgiven after a participant teaches for the 

specified number of years in an eligible school or subject area. This 

particularly resonated with financial aid officers in two of the four focus 

groups that included financial aid administrators. They said the 

Perkins cancellation program in particular is well designed because a 

Stakeholders Noted 

Benefits of Teacher 

Aid Programs, but 

Students and 

Teachers Face 

Challenges Meeting 

and Understanding 

Requirements

Programs Help Recruit 

Needed Teachers and 

Help Them Pay for School
Page 21 GAO-15-314 Financial Aid for Teachers

portion of a borrower’s Perkins loan can be cancelled after only 1 year 

of service.

While TEACH Grants help students pay for school, recipients may face 

challenges satisfying and understanding grant requirements after they 

graduate according to college administrators in our focus groups, as well 

as students and other stakeholders we interviewed, and our review of 

FSA Ombudsman complaint data.

• Finding and keeping an eligible teaching position. College 

administrators in three-fourths of our focus groups (six of eight) said 

school districts in their states had limited hiring, which could limit a 

graduate’s ability to find a qualifying teaching position. Officials from 

five of seven higher education associations, representatives from both 

teacher unions, and more than half of the students and recent 

graduates we interviewed (12 of 23) expressed related concerns 

about finding and keeping an eligible teaching position. For example, 

one student said that at times it can take a year or two to find a 

permanent position, and that the position may not be at a school that 

meets TEACH Grant eligibility requirements.

• Paperwork requirements. TEACH grant recipients may not 

understand annual employment certification requirements, according 

to college administrators in our focus groups and our review of FSA 

Ombudsman complaint data, putting them at risk of not meeting grant 

requirements. College administrators in half of our focus groups with 

schools that offer the TEACH Grant program (two of four) said that 

students may not fully comprehend the paperwork requirements 

associated with the grants after they graduate. Our review of 

customer complaint data from the FSA Ombudsman from October 

2011 through March 2014 corroborated these concerns. Specifically, 

of the 212 requests for assistance the Ombudsman received on the 

TEACH Grant program, the majority of these—64 percent—cited 

problems submitting annual certification paperwork.36

 36We chose this time frame to analyze data that spanned both servicers that managed the 

TEACH Grant program.

The more 

common challenges cited included recipients not receiving reminders 

that their paperwork was due—as the servicer is required to send—or 

asserting that their grant was converted through no fault of their own. 

For instance, one participant told the Ombudsman that the servicer 

Stakeholders Identified 

Challenges for TEACH 

Grant Recipients, 

Including Finding a 

Qualifying Job and 

Understanding Paperwork 

Requirements
Page 22 GAO-15-314 Financial Aid for Teachers

did not process the paperwork she submitted and her grant was 

converted to a loan. She said she was told she could file an appeal 

but that she should not bother because most appeals are rejected. 

Another participant told the Ombudsman she submitted the paperwork 

after her first year of teaching but forgot after her second year. As a 

result, despite working as a special education teacher in an eligible 

school, her grant was converted to a loan.

As a result of challenges that TEACH grant recipients and schools can 

face in either meeting grant requirements or administering the program, 

some colleges and universities restrict participation or do not offer the 

program at all, according to college administrators in our focus groups, 

and other stakeholders we interviewed. As freshman and sophomores 

tend to change majors more frequently, college administrators in more 

than half of the focus groups that offer the TEACH Grant program (three 

of four) said that some colleges and universities restrict TEACH Grant 

participation to juniors, seniors, or graduate students. Other colleges and 

universities have opted not to offer the program at all due to concerns 

with their students’ ability to satisfy grant requirements. College 

administrators in all four of our focus groups with schools that do not offer 

the program said they did not do so because they feared it would put 

students at risk of accumulating additional debt if they were unable to 

satisfy grant requirements. For instance, one college administrator said 

that Education’s early estimates that 75 to 80 percent of TEACH grant 

recipients would not meet grant requirements influenced their decision not 

to offer the program.37

 37According to its annual budget requests for fiscal years 2009 and 2010, Education 

estimated that approximately 80 percent of TEACH grant recipients would have their 

grants converted to unsubsidized Direct Loans for not completing teaching requirements. 

Education officials said the projected failure rate was primarily developed for budgeting 

purposes and was calculated before the first TEACH grants were awarded based on data 

derived from studies conducted by the National Center for Education Statistics. Education 

subsequently revised this estimate to 75 percent.

A senior Education official also confirmed that 

some schools considered this rate, among other things, when deciding 

not to participate. College administrators also noted concerns about the 

grant converting to a loan if a recipient changed to a non-eligible major or 

could not find an eligible job after graduation. Officials from a higher 

education association representing college financial aid offices said some 

schools chose not to offer the program because it was too burdensome 

for their schools to administer and expressed concern about the grants 

converting to loans if recipients do not fulfill requirements. College 
Page 23 GAO-15-314 Financial Aid for Teachers

administrators from two of the four focus groups who offer TEACH grants 

also said the program can be burdensome to administer. For instance, 

one focus group participant said additional staff time is needed to provide 

TEACH Grant specific counseling to students. Another participant 

expressed concern about having to provide counseling to students each 

year they received a TEACH grant as opposed to other student aid 

programs that do not require students to receive counseling with each 

disbursement.

Loan forgiveness program requirements can be confusing, making it 

difficult for teachers to participate in or maximize the benefits from the 

Perkins cancellation and Stafford forgiveness programs, according to 

stakeholders we interviewed. For example, officials from three institutions 

and two Perkins loan servicers said that graduates may not understand 

they have to submit an application annually to have 100 percent of their 

Perkins loans cancelled. Graduates may also not be aware that they will 

lose Perkins cancellation benefits if they choose to consolidate their 

Perkins loans with other federal student loans, according to participants in 

half of our focus groups with financial aid administrators (two of four). A 

Stafford loan servicer said that teachers may also be unaware that 

Stafford loans disbursed before 1998 are ineligible for forgiveness. This 

concern was corroborated by our review of FSA complaint data: it showed 

an estimated 21 percent38 of the 825 customer contacts received by the 

Ombudsman on teacher loan forgiveness programs from October 2011 

through March 201439 involved a teacher’s not understanding that an 

outstanding balance on a Stafford loan or the age of a loan could affect 

his or her eligibility for the Stafford forgiveness program.40

Teachers may also not know how requirements for the Stafford loan 

forgiveness program affect other programs that may be available to them, 

 38The 95 percent confidence interval for this estimate is from 14 percent to 30 percent.

39We reviewed a simple representative random sample of 100 out of a possible 825 

customer complaints the FSA Ombudsman received from October 2011 through March 

2014 related to teacher loan forgiveness programs. For a more detailed description, see 

Appendix I. 

40As mentioned earlier, the Stafford loan forgiveness program is only available to a 

borrower who has no outstanding loan balance under the Federal Family Education Loan 

Program or the Direct Loan Program on October 1, 1998, or who has no outstanding loan 

balance on the date he or she obtains a loan after October 1, 1998.

Confusing and 

Complicated Loan 

Forgiveness Program 

Requirements Make 

Maximizing Benefits 

Challenging
Page 24 GAO-15-314 Financial Aid for Teachers

such as Public Service Loan Forgiveness (PSLF), which may make it 

difficult to decide which is most beneficial to participate in. For example, 

due to federal law governing Stafford loan forgiveness, teachers cannot 

count the same teaching service towards both Stafford loan forgiveness 

and PSLF.41 Therefore, qualifying teachers must choose between a set 

amount of forgiveness through the Stafford program after 5 years, or wait 

and receive a potentially greater amount through PSLF after 10 years.42

Loan repayment options can also affect the total amount of loan 

forgiveness a teacher could receive across the programs. Stafford loan 

borrowers are automatically placed in a standard 10-year repayment plan, 

the same length of time needed to qualify for PSLF. Consequently, a 

teacher who pays off the loan through the Standard plan would have 

repaid the loan in full at the time he is eligible to receive PSLF. If, 

however, borrowers choose a repayment plan that spreads the payments 

over a longer period of time, they are likely to have a balance to be 

forgiven through PSLF at 10 years, provided the borrower qualifies for 

lower payments because of income and family size.43

Further, decisions about repayment plans and whether to participate in 

Stafford loan forgiveness or PSLF, which have to be made soon after 

graduation and throughout the life of the loan, can affect a teacher’s total 

 4120 U.S.C. §§ 1078-10(g)(2) and 1087j(g)(2)(B).

42Consumer Financial Protection Bureau, Public Service & Student Debt: Analysis of 

Existing Benefits and Options for Public Service Organizations (Washington, D.C.: August 

2013). Borrowers are eligible for PSLF after making 120 qualifying on-time monthly 

payments, and while the payments do not need to be consecutive, the earliest a borrower 

can receive forgiveness is after 10 years. Perkins borrowers also face a choice between 

benefits, according to the report. If a teacher with a Perkins loan chooses to consolidate it 

into a Direct Loan to take advantage of PSLF, the teacher will lose any Perkins 

cancellation benefit.

43For example, the Income-Based Repayment (IBR) plan has a repayment period up to 25 

years, but a borrower could repay their loan in less time depending on the borrower’s 

income-based monthly payments and the amount of the loan to be paid off. Under IBR, 

any remaining loan balance is forgiven after 25 years of qualifying monthly payments if the 

loans are not fully repaid at the end of the repayment period. For new borrowers on or 

after July 1, 2014 who choose IBR, any remaining loan balance is forgiven after 20 years 

of qualifying monthly payments.
Page 25 GAO-15-314 Financial Aid for Teachers

payment toward the loan, according on our analysis of Education data.44

• A teacher who stays in the standard repayment plan and participates 

in Stafford teacher loan forgiveness, would pay about $50,500 but 

would have repaid the loan in full at the time he was eligible to receive 

PSLF.

For example, a typical teacher at a low-income school with a master’s 

degree incurs about $41,500 in federal student loan debt, and would pay 

about $57,300 in total loan payments under the default standard 10-year 

repayment plan. However, the “typical teacher” in our example could pay 

more or less than $57,300 over the life of the loan depending on the 

repayment plan and loan forgiveness option he chooses. For example:

• A teacher who chose the Income-Based Repayment (IBR) plan, which 

has a repayment period up to 25 years, and participates in the 

Stafford loan forgiveness program would pay about $56,400.

• A teacher who chose the IBR plan and forgoes Stafford teacher loan 

forgiveness after 5 years to instead take PSLF after 10 years of 

teaching, would pay about $48,500.

As mentioned previously in this report, although information on the loan 

forgiveness programs is available on Education’s website and in 

resources provided to borrowers while in school, borrowers continue to 

struggle to understand how these programs work. Students and teachers, 

therefore, may not fully understand their options or the tradeoffs of 

participating in one program over another. The Consumer Financial 

Protection Bureau (CFPB) has also asserted that the complexity of 

financial aid program requirements may act as a deterrent for many 

borrowers weighing a career in public service.45

 44Using 2012 B&B data (follow-up to the 2008 survey), we reviewed average salary and 

debt information for a teacher with a master’s degree working at a low-income school. For 

our simulations, we estimated the average annual salary for a teacher at a low-income 

school with a master’s degree to be about $42,000. Because the teacher is working at a 

low-income school, we assumed the teacher would receive $5,000 forgiveness under the 

Stafford loan forgiveness program. For more information on our analysis and assumptions 

see Appendix I.

To help teachers and 

others navigate the various loan forgiveness options, CFPB created a 

45CFPB, Public Service & Student Debt: Analysis of Existing Benefits and Options for 

Public Service Organizations.
Page 26 GAO-15-314 Financial Aid for Teachers

toolkit to help public sector employers educate their staff about loan 

forgiveness programs including how the programs interact.46

Education monitors the servicer contracted to manage the TEACH Grant 

program including ensuring the servicer regularly communicates with 

recipients, tracking recipients’ progress towards satisfying their grant 

requirements, and ensuring the servicer correctly converts TEACH grants 

into loans if recipients do not satisfy them, according to Education 

officials.47

From August 2013 through September 2014, Education and its 

contracted TEACH Grant servicer discovered 2,252 recipients had their 

grants erroneously converted to loans by the current and previous 

servicer due to servicer error. The erroneous conversions were identified 

when recipients contacted the current servicer or Education to dispute 

their conversion, or when, after investigating specific errors related to 

Education monitors program participation through monthly 

reports generated by the servicer and addresses recipient complaints 

including disputes regarding grant-to-loan conversion.

 46CFPB, Employer’s Guide to Assisting Employees with Student Loan Repayment: A 

toolkit for School Districts, Non-Profit Organizations, and other Public Service Employers, 

(Washington, D.C.: August 2013). 

47The current servicer began managing the TEACH Grant program in July 2013 and prior 

to that date, Education contracted with another servicer to manage the program.

Education Has

Taken Steps to 

Improve Program

Management, but 

Issues with TEACH 

Grant-to-Loan 

Conversions and 

Communication 

Remain

Education Provides 

Oversight of the 

Contracted Servicer and 

Tracks Participation, but 

Erroneous Grant-to-Loan 

Conversions Remain a 

Management Challenge
Page 27 GAO-15-314 Financial Aid for Teachers

particular loans—some of which were discovered when recipients 

disputed their loan conversions—the loan servicer performed system 

queries to more systemically investigate these particular errors. The 

overall scope of the problem is unknown. Our analysis of servicer data 

shows that the majority of the erroneous conversions—56 percent—

occurred because the servicer did not give the recipient 30 days from the 

final notification to certify that the recipient was teaching or intended to 

teach (see fig. 5). Rather, the servicer converted the grant to a loan within 

the 30-day window when a recipient is permitted to respond. According to 

the current servicer, recipients did not get the full 30 days to submit the 

paperwork because of time required to process and mail the letter. The 

servicer classified another 19 percent as erroneously converted because, 

according to the servicer, a recipient did not understand the terms of the 

grant and certification requirements—including paperwork needed to 

document teaching service—or the servicer provided inaccurate, unclear, 

confusing, or misleading explanations of program and certification 

requirements to the recipient.48

 48According to Education, if a grant is found to have been converted to a loan in error it is 

the only circumstance under which a grant can be converted back from a loan. If servicer 

error is found, the servicer will reinstate the grant and reimburse the amount the recipient 

has paid toward the loan or apply it to other outstanding student loans. For the majority of 

the accounts found in the review, the recipient was in the 6-month grace period after a 

grant became a loan and therefore was not yet required to make a payment. To date, 

$196,000 has been refunded to grant recipients or applied to outstanding balances. 
Page 28 GAO-15-314 Financial Aid for Teachers

Figure 5: Types of Errors Identified by Education and the Teacher Education 

Assistance for College and Higher Education (TEACH) Grant Servicer for the 2,252 

Erroneous Grant-to-Loan Conversions, August 2013 through September 2014

Note: Percentages will not add up to 100 due to rounding.

As a result of the errors discovered to date, Education officials said they 

plan to review accounts for all of the approximately 36,000 TEACH grant

recipients who had grants converted to loans by the current and previous 

servicer since the program’s inception. Education officials said the review 

will include transferring the approximately 2,600 TEACH loans held by 

other servicers to the current servicer, but according to officials, 

discussions are ongoing and the agency has not yet established a time 

frame for when the transfer or overall review will be completed. Federal 

internal control standards call for establishing time frames as part of 

ongoing monitoring and such time frames would allow Education and 
Page 29 GAO-15-314 Financial Aid for Teachers

others to assess Education’s progress towards reviewing all recipient 

accounts including those currently held by other servicers.49

The current servicer managing the program has also taken steps to 

address servicer error moving forward. Specifically, the servicer reported 

that it now conducts additional system checks and manually reviews all 

accounts flagged for conversion to determine whether the required 

certification forms were submitted by the recipient according to regulation. 

Over the course of 1 month (May 2014), for example, this manual review 

prevented erroneous conversions for 108 recipients. Education also 

expanded the servicer’s authority, so that it can reconvert loans to grants 

in some circumstances without elevating a dispute to Education. 

According to the servicer officials, this allowed the servicer to evaluate the 

cases more efficiently and contributed to the number of loans reviewed 

and reconverted to grants over the past year. According to Education 

officials, the high number of recent reconversions from loans back to 

grants is the result of addressing errors that occurred in the past under 

the previous servicer, and officials do not expect this volume to continue.

In October 2012—about 4 years after the first TEACH grants were 

awarded and before the new servicer began managing the program—

Education initiated quarterly monitoring of a sample of grants to ensure 

they had been appropriately converted to loans. Three of these four 

quarterly monitoring reports in fiscal year 2013 did not include 

observations of or issues with servicing error, although 541 of the 2,252 

(24 percent) erroneous conversions discovered as of September 30, 2014 

occurred with the previous servicer. Further, Education provided us with 

incomplete documentation regarding how it provided oversight prior to 

October 2012. For example, officials said they received quarterly briefings 

from the previous servicer on the status of the TEACH Grant portfolio, 

including information on grant and loan volume, but they could not locate 

documentation for fiscal years 2011 and 2012. While agencies have 

flexibility in how they oversee contractor performance, Office of 

Management and Budget best practices for contract administration cite

the importance of documenting monitoring activities.50

 49GAO/AIMD-00-21.3.1.

50Office of Management and Budget, Office of Federal Procurement Policy, A Guide to 

Best Practices for Contract Administration (Washington, D.C.: October 1994).
Page 30 GAO-15-314 Financial Aid for Teachers

Education officials said that in July 2013, they established a more formal 

and comprehensive monitoring process when the new servicer began 

managing the program, which includes monthly reports and weekly 

meetings. According to officials, Education became aware of the errors 

through this increased monitoring, including more detailed system checks 

independently initiated by the current servicer. Further, while the current 

servicer initiated the majority of the erroneous conversions, some of these 

errors may have occurred as a result of inaccurate data provided by the 

previous servicer. Officials with the current servicer stated that data 

received from the previous servicer contained a large number of 

anomalies that resulted in confusion and servicing issues when they 

began servicing the contract. As a result, the current servicer said it 

proposed a 60-day hold on grant-to-loan conversions (July 23, 2013, 

through October 10, 2013) to allow the servicer to work with the data and 

give recipients more time to submit required paperwork.

To date, Education and the current servicer have identified, for each 

corrected erroneous conversion, whether the error was caused by a data 

issue or a communication issue with recipients. However, Education has 

not assessed why the data or communication issues occurred or how the 

errors went undetected by Education, nor has it outlined plans to do so. 

Therefore, we are unable to assess whether the changes Education 

made to its monitoring process are sufficient to address any systemic 

problems. Further, federal internal control standards highlight the need for 

ongoing monitoring51 and our body of work on performance measures 

and evaluations has shown that successful organizations conduct 

periodic or ad hoc program evaluations to examine how well a program is 

working.52 These types of evaluations allow agencies to more closely 

examine aspects of program operations, factors in the program 

environment that may impede or contribute to its success, and the extent 

to which the program is operating as intended.53

 51

Absent a review 

examining the underlying cause of the erroneous conversions or plans to 

conduct such a review, Education cannot provide reasonable assurance it 

GAO/AIMD-00-21.3.1.

52GAO-11-646SP, GAO-12-208G. 

53Elements often examined in such evaluations include the program activities’

conformance with statutory and regulatory requirements, program design, or customer 

expectations. GAO-11-646SP.
Page 31 GAO-15-314 Financial Aid for Teachers

has taken steps to minimize the risk of erroneous conversions from 

occurring in the future.

Education has increased its communication with TEACH grant recipients 

since the program transitioned to the new servicer in July 2013, including 

the servicer sending additional notifications to recipients and providing 

more assistance to schools, according to Education officials. Officials said 

that while they did not identify specific communication issues with the 

previous servicer, they used the transition to a new servicer as an 

opportunity to provide recipients with information on the program that is 

easier to understand. The current servicer also standardized the 

certification form and established a web portal where students can certify 

their intent to teach.

Education has also established a process whereby TEACH grant 

recipients may appeal to the servicer or Education to dispute a 

conversion to a loan, and Education will reverse it if servicer error is 

found. However, we found that Education and the servicer provide 

incomplete and inconsistent information to recipients about the availability 

of and criteria for disputing a grant-to-loan conversion. The servicer’s 

website, for example, states that recipients can contact the servicer if they 

believe a grant was converted to a loan in error, but does not include the 

reasons such a conversion would be deemed erroneous, how the 

problem would be rectified, or the criteria considered in the adjudicating 

process. Further, all correspondence and policy documents provided to 

TEACH grant recipients—including the Agreement to Serve, exit 

counseling at graduation, and notification from the servicer that the grant 

has converted to a loan—state that once a TEACH grant is converted to a 

loan it cannot be reconverted to a grant, which is inconsistent with 

Education’s grant-to-loan conversion dispute process.

54

This incomplete and unclear communication with TEACH grant recipients 

about the dispute process is inconsistent with federal internal control 

standards.55

 54The TEACH Grant regulation states that once a TEACH grant is converted to a loan it 

cannot be reconverted to a grant. 34 C.F.R. § 686.43(d). According to Education officials, 

this does not preclude reconversion if it is determined that the grant was converted due to 

servicing error.

These standards include establishing open and effective 

55GAO/AIMD-00-21.3.1.

Education Increased 

Communication About 

TEACH Grants, but It 

Lacks Clear, Consistent 

Policies and Guidance 

to Help Recipients 

Understand the 

Dispute Process
Page 32 GAO-15-314 Financial Aid for Teachers

external communication. A senior Education official acknowledged 

information about the dispute process and what constitutes servicer error 

could be valuable to share with grant recipients to ensure they 

understand how the program works. Absent clear, consistent, and 

complete information about whether loan conversions can be disputed 

and what constitutes servicer error, recipients are unlikely to understand 

how to navigate the dispute process, criteria on which the dispute 

decisions are made, or whether a dispute process even exists.

Education collects participation data on the loan forgiveness programs for 

teachers and the TEACH Grant program and periodically reviews 

students’ persistence in pursuing an education degree and teaching 

position, but the agency has not established performance measures for 

the TEACH Grant or the loan forgiveness programs nor used available 

data to systematically evaluate them. Education officials said the TEACH 

Grant program is too new to provide meaningful outcome data and 

specific metrics for the program are still being determined. Officials added 

that data on the loan forgiveness programs is too small for in-depth 

analysis. While no cohort of TEACH grant recipients has completed the 8-

year service period, available data indicate that one-third of participants 

have not met grant requirements or requested their grants be converted. 

These programs support Education’s strategic goals of access to and 

persistence in higher education programs, and its goal to recruit and 

retain effective teachers. Without interim measures, such as evaluating 

participation against established benchmarks, it will be difficult for 

Education to assess whether the programs are meeting these goals or 

gauge performance on an ongoing basis.56

We have previously found that a fundamental element in an 

organization’s effort to manage for results is its ability to set meaningful 

goals for performance and to measure progress toward those goals, and 

that the GPRA Modernization Act of 2010 reinforces the need for 

balanced performance measures.57

 56GAO, Higher Education: Improved Tax Information Could Help Families Pay for College, 

Education’s Strategic Plan also states 

that effective implementation of the agency’s priority and strategic goals, 

including teacher recruitment and retention, will depend, in part, on the 

GAO-12-560 (Washington, D.C.: May 2012). 

57GAO-13-518. 

Education Has Not 

Established Performance 

Measures for TEACH 

Grant and Loan 

Forgiveness Programs
Page 33 GAO-15-314 Financial Aid for Teachers

effective use of high-quality and timely data, including evaluations and 

performance measures, throughout the life cycle of policies and 

programs. Absent performance measures and efforts to assess progress 

towards them, it will be difficult for Education to gauge the programs’

success or use data to improve program administration and participant 

outcomes.

The U.S. Department of Education plays a critical role in ensuring that 

children have access to high-quality teachers—particularly in low-income 

schools where teacher retention can be a challenge—by managing 

financial aid programs that help teachers pay for school. However, while 

the TEACH Grant and the loan forgiveness programs could be key drivers 

in Education’s efforts to increase teacher recruitment, a current lack of 

program awareness among teachers and students may undermine the 

agency’s teacher recruitment goals. Without exploring and implementing 

ways to increase awareness of these programs, Education is missing an 

opportunity to widen the pool of prospective educators and reduce levels 

of student debt that may drive teachers away from the profession. By 

accepting a TEACH grant award, students make a significant service 

commitment to teach in schools and subjects that have the greatest need 

for qualified and dedicated teachers. In recognition of this commitment, 

Education could take additional steps to ensure that the program is wellmanaged and give new teachers every opportunity to succeed. While 

over 112,000 students have committed to teaching in America’s neediest 

schools by accepting a TEACH grant award, a significant portion are not 

meeting the terms of the grant. Without a full understanding of why 

teachers are not able to meet TEACH Grant service requirements, 

Education is hindered from taking mitigating actions to reduce the number 

of grant-to-loan conversions and bolster program completion.

The number of erroneously converted grants also signals a clear need for 

improved program management, particularly with regard to the grant-toloan conversion dispute process. Examining the underlying cause of the 

erroneous conversions is an important step that will provide Education 

with additional assurance the actions it has taken to improve program 

management are sufficient. In addition, establishing time frames for

transferring the approximately 2,600 TEACH loans held by other servicers 

to the current servicer, and reviewing the accounts for the approximately 

36,000 recipients who had their grants converted to loans would allow 

Education and others to track the agency’s progress toward more 

effectively managing the program. Providing clear, consistent information 

about the option to dispute a grant-to-loan conversion, and the criteria for 

Conclusions
Page 34 GAO-15-314 Financial Aid for Teachers

which a dispute would be considered, would also help teachers who may 

have felt deprived of due process better understand the process. A better 

understanding of these issues may also encourage colleges and 

universities to consider offering TEACH grants to their students. Finally, 

without performance measures it will be difficult for Education to assess 

whether the TEACH Grant and the loan forgiveness programs are helping 

to recruit and retain teachers to high-need schools and subject areas.

To enhance participation in and strengthen management of federal 

student aid programs for teachers, we recommend the Secretary of 

Education direct Federal Student Aid’s Chief Operating Officer to take the 

following five actions:

• Explore and implement ways to raise awareness about the TEACH 

Grant and the loan forgiveness programs.

• Take steps to determine why participants are not able to meet TEACH 

Grant service requirements and examine ways to address those 

challenges.

• 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.

• 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.

• Establish program performance measures for the TEACH Grant and 

the loan forgiveness programs to assess against established goals 

and to inform program administration.

We provided a draft of the report to Education for review and comment. 

Education provided us with their written comments, which are reproduced 

in Appendix II. Education concurred with our five recommendations and 

noted steps it is taking or plans to take to implement them. 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
Page 35 GAO-15-314 Financial Aid for Teachers

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Secretary of 

Education, relevant congressional committees, and other interested 

parties. In addition, the report is available at no charge on the GAO 

website at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me at (617) 788-0580 or nowickij@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made key contributions to this report 

are listed in Appendix III.

Jacqueline M. Nowicki, Director

Education, Workforce, and Income Security Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 36 GAO-15-314 Financial Aid for Teachers

The objectives of our report were to examine: (1) how many students and 

teachers are potentially eligible for and participate in the three teacher aid 

programs, and for the Teacher Education Assistance for College and 

Higher Education (TEACH) Grant program, the extent to which recipients 

are satisfying grant requirements; (2) what selected schools, teachers, 

and students have identified as the benefits of and challenges with 

program participation; and (3) to what extent the U.S. Department of 

Education (Education) has taken steps to effectively manage and 

evaluate these programs. We conducted this performance audit from 

November 2013 to February 2015 in accordance with generally accepted 

government auditing standards. Those standards require that we plan 

and perform the audit to obtain sufficient, appropriate evidence to provide 

a reasonable basis for our findings and conclusions based on our audit 

objectives. We believe that the evidence obtained provides a reasonable 

basis for our findings and conclusions based on our audit objectives.

Federal Agencies, Laws, and Regulations

To inform all of our objectives, we reviewed relevant federal laws, 

regulations and documents, and interviewed officials with Education’s 

Office of Postsecondary Education; Office of Planning, Evaluation, and 

Policy Development; Budget Service Office; and Federal Student Aid 

(FSA). In addition to interviews with agency officials, to assess the extent 

to which Education has taken steps to effectively manage and evaluate 

these programs, we interviewed officials from the loan servicing company 

contracted by Education to administer the TEACH Grant program, the two 

largest Federal Stafford loan servicers in terms of the number of 

borrowers, and two of the larger Federal Perkins loan servicers in terms 

of the number of colleges and universities they serve, according to a 

higher education association representing schools that offer Perkins 

loans. We also reviewed agency policy and planning documents, 

guidance provided to various offices within the agency and to the loan 

servicers, documentation of servicer monitoring activities, and information 

provided to prospective and current participants; we reviewed 

documentation from the servicers on program administration and 

management and correspondence and other documentation provided to 

program participants; and we interviewed officials from the Consumer 

Financial Protection Bureau to discuss their work on student debt and 

loan forgiveness programs available to teachers and other public sector 

employees. We compared this information to federal internal control 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-15-314 Financial Aid for Teachers

standards,1 GAO’s prior work on performance measurement and 

evaluation leading practices, and Education’s departmental and FSAspecific strategic planning documents.2

Data Analysis

To assess participation in the TEACH Grant, Stafford Teacher Loan 

Forgiveness, and Perkins Loan Teacher Cancellation programs, we 

reviewed data from Education’s National Student Loan Data System 

(NSLDS) from the last decade for the Stafford Forgiveness and Perkins 

Cancellation programs, and from school year 2008-2009 for the TEACH 

Grant—the first year Education awarded the grants. For the TEACH 

Grant program specifically, we determined the extent to which grant 

recipients were satisfying requirements by analyzing participation data 

from the contracted servicer who administers the program. These data 

included information on the status of TEACH grant recipients such as the 

number of recipients still in school and those who started the service 

period. For those in the service period, we reviewed the number of 

recipients who have satisfied the grant requirements, those who had their 

grant converted to a loan, and those who were teaching or had certified 

intent to teach. We compared this and other information about the

TEACH Grant program to Education’s departmental and FSA-specific 

strategic planning documents, which outline goals and objectives both for 

federal financial aid programs and teacher recruitment and retention.

To develop estimates for the population that is potentially eligible for 

these programs, we analyzed data from Education’s Integrated 

Postsecondary Education Data System (IPEDS) and Schools and Staffing 

Survey (SASS). For the TEACH Grant program, we analyzed IPEDS 

academic program completion data to obtain the number of students who 

graduated or completed a potentially eligible program in participating 

schools. Specifically, we matched the Office of Postsecondary Education 

Identification number of schools that offered TEACH Grants during the 

 1

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).

2

GAO, Performance Measurement and Evaluation: Definitions and Relationships, 

GAO-11-646SP (Washington, DC: May 2011); Designing Evaluations: 2012 Revisions, 

GAO-12-208G (Washington, DC: January 2012); and Managing for Results: Executive 

Branch Should more Fully Implement the GPRA Modernization Act to Address Pressing 

Governance Challenges, GAO-13-518 (Washington, D.C.: June 2013).
Appendix I: Objectives, Scope, and 

Methodology

Page 38 GAO-15-314 Financial Aid for Teachers

2013 though 2014 academic year to IPEDS completion data for the prior 

year because this is the most recent IPEDS data available. We reviewed 

the Classification of Instructional Programs codes—which identifies 

instructional program specialties within educational institutions—in the 

IPEDS Completion Data file for academic year 2012-2013. We identified 

96 potentially eligible program types. Schools have discretion to choose 

which programs are eligible to participate and the federal government, 

states, and local educational agencies have discretion to designate highneeds subjects; therefore we identified programs that could be included in 

teacher preparation programs such as general education and secondary 

education and teaching. We also included those with a concentration in 

math, science, special education, foreign language, bilingual education, 

and reading specialists because those programs are specifically listed in 

TEACH Grant statute as qualifying subjects. In developing our estimate, 

we included those who graduated with qualifying bachelor’s or master’s 

degrees and those who completed post-baccalaureate certificate 

programs since students graduating with these degree types are also 

eligible to receive TEACH Grants. Our analysis of the TEACH Grant 

eligible population is limited in a number of ways: (1) schools have 

discretion on which students and grade levels are eligible to participate in 

the program, therefore not all who graduated from eligible programs could 

necessarily apply; (2) students who graduated may also have not reached 

or maintained the 3.25 GPA often needed to participate. Further, we only 

counted those who graduated from eligible programs, not those who were 

enrolled in any given year. We focused on graduating seniors and 

graduate students because, according to our focus groups and 

interviews, some schools limit eligibility to juniors, seniors, and graduate 

students.

To estimate the population of teachers potentially eligible for the Stafford 

Teacher Loan Forgiveness program, we reviewed program eligibility 

requirements and analyzed SASS data to identify the number of full-time 

teachers in public and private low-income schools during the 2011 

through 2012 academic year; the most recent year of SASS data 

available. Because this is a probability sample, estimates based on this 

survey are subject to sampling error. Unless otherwise noted, percentage 

estimates based on this survey have 95 percent confidence intervals 

within +/- 5 percentage points of the estimate itself. We determined that 

NSLDS, SASS, IPEDS, and TEACH Grant servicer data are sufficiently 

reliable for the purposes of this report by testing it for accuracy and 

completeness, reviewing documentation about systems used to produce 

the data, and interviewing agency officials.
Appendix I: Objectives, Scope, and 

Methodology

Page 39 GAO-15-314 Financial Aid for Teachers

To illustrate a typical teacher’s loan repayment and forgiveness options 

and the choices teachers must make to take advantage of the forgiveness 

programs, we used data from Education’s Baccalaureate and Beyond 

Longitudinal Study (B&B) from the 2008 cohort to create a typical teacher 

in terms of debt and salary with a master’s degree teaching at a lowincome school. The study included approximately 19,000 sample 

members interviewed in 2009 and 2012. For the purposes of our analysis, 

we focused on responses from the 2012 follow-up for those teachers 

teaching at Title I schools who earned their master’s degree because this 

survey year includes the most recent debt and salary information 

available. Because this is a probability sample, estimates based on this 

survey are subject to sampling error. Unless otherwise noted, percentage 

estimates based on this survey have 95 percent confidence intervals 

within +/- 5 percentage points of the estimate itself. To determine the debt 

amount for this typical teacher, we analyzed the cumulative total amount 

borrowed in federal loans through 2012 assuming the teacher would 

consolidate the federal loans they incurred. We assumed half of their debt 

was incurred as an undergraduate and half pursing their master’s degree. 

Therefore, when we applied the general Stafford subsidized loan limits to 

the overall debt amount ($23,000 for undergraduate and $65,500 for 

graduate) the entire debt amount for the typical teacher in our scenario 

was subsidized. Because the typical teacher in our example works at a 

low-income school, we assumed the teacher would receive $5,000 

forgiveness under the Stafford Loan Forgiveness Program. We 

determined the salary amount for those teachers by examining the 

average initial salary in 2012 and assumed a 5 percent salary growth rate 

and a 3.3 percent growth of the poverty threshold to coincide with 

assumptions made by Education as part of its repayment calculator.3

 3

Recently, Education changed its assumption regarding the future increases in the poverty 

threshold from 3.3 percent per year to the Congressional Budget Office’s inflation 

projection (which averages 2.3 percent over the next ten years). Projected Income-Based 

Repayment (IBR) payments under the new assumption will be higher, since it will have the 

effect of producing a relatively lower poverty threshold.

We 

also used the Income-Based Repayment (IBR) plan thresholds for loans 

made before July 1, 2014; for new loans made on or after July 1, 2014 

new IBR thresholds apply. Under these new IBR thresholds, a teacher 

with similar income and debt amounts could see larger benefits. We also 

assumed a 6.8 percent interest rate because teachers responding to the 

B&B survey would have undergraduate and graduate Direct Subsidized 

Loans disbursed between July 1, 2006, and June 30, 2012, when that 
Appendix I: Objectives, Scope, and 

Methodology

Page 40 GAO-15-314 Financial Aid for Teachers

interest rate applied. Teachers could have had additional loans disbursed 

before July 1, 2006, but for ease of reporting, we assumed a consistent 

interest rate. We also assumed the teacher would not receive loan 

forbearance. We assumed that the teacher was single and without 

children (which affects the poverty threshold and the income based 

amount due). After discussion with loan servicers, we assumed that even 

after the teacher loan forgiveness was applied, the monthly amount due 

did not change. This had the effect of shortening the term of the loan. 

Finally, we applied the observed loan level and income data to the 

various loan forgiveness programs to simulate what the total payments 

would be under the different programs. To the extent possible, we 

validated our results against the online repayment estimator provided on 

Education’s website. These simulations are intended for illustrative 

purposes only, as they do not incorporate the experiences of individual 

borrowers. For example, individual borrowers may experience periods of 

unemployment (reducing income temporarily), or marry and form families 

(changing the appropriate poverty threshold). We determined that B&B 

data are sufficiently reliable for the purposes of this report by testing it for 

accuracy and completeness and reviewing documentation about systems 

used to produce the data.

FSA Ombudsman Data

To learn more about the challenges participants face, and the steps 

Education has taken to resolve them, we analyzed customer complaint 

data from Education’s FSA Ombudsman. We reviewed all 212 customer 

requests the Ombudsman received for assistance related to the TEACH 

Grant program from October 2011 through March 2014. For the loan 

forgiveness programs, we reviewed a simple random sample of 100 

customer requests out of a population of 825 such requests the

Ombudsman received from October 2011 through March 2014.4 The loan 

forgiveness sample is generalizable to the population of requests. We 

requested data covering this time period because it spanned both 

servicers that managed the TEACH Grant program.5

 4

The full population of requests consisted of 835 during this period. However, we excluded 

10 cases from this population that we found to be unrelated to the Stafford Teacher Loan 

Forgiveness or Perkins Loan Teacher Cancellation programs specifically. 

Because we 

5

The current TEACH Grant servicer began servicing the program in July 2013. Prior to 

that, the program was administered by a different servicer. 
Appendix I: Objectives, Scope, and 

Methodology

Page 41 GAO-15-314 Financial Aid for Teachers

followed a probability procedure based on random selections, our sample 

is only one of a large number of samples that we might have drawn. 

Since each sample could have provided different estimates, we express 

our confidence in the precision of our particular sample’s results as a 95 

percent confidence interval (e.g., plus or minus 10 percentage points). 

This is the interval that would contain the actual population value for 95 

percent of the samples we could have drawn. In this report we present 

confidence intervals for estimates based on this sample along with the 

estimate itself. Using content analysis, we developed categories to 

characterize the types of assistance TEACH grant recipients and 

borrowers requested or complaints they expressed about the programs. 

An analyst then reviewed the requests and recorded each request by 

category. These categorizations were verified by a second analyst and 

any discrepancies were resolved by both analysts.

Focus Groups

To describe program benefits and challenges as identified by 

stakeholders, we conducted eight focus groups with administrators from 

schools of education and financial aid offices from 58 colleges across the 

public, private, and for-profit sectors. The Stafford Teacher Loan 

Forgiveness program is administered by servicers contracted by 

Education; therefore we did not ask school officials about challenges 

administering the program. Four focus groups were with college 

administrators whose institutions offered the TEACH Grant program to 

their students while the remaining four were with college administrators 

whose institutions did not offer the program. These sessions involved 

structured small-group discussions designed to gain more in-depth 

information about (1) the benefits and challenges associated with the 

TEACH Grant and Perkins Loan Teacher Cancellation programs, (2) 

outreach and guidance the institutions provided to students or others 

about these programs, and (3) any guidance Education provided to these 

administrators about the programs. We also asked about program 

improvements and to what extent these programs succeed in recruiting 

and retaining teachers in high-need subjects and low-income schools.

Consistent with typical focus group methodologies, our design included 

multiple groups with varying characteristics but shared one or two 

homogenous characteristics. As the primary homogenous characteristic, 

each focus group contained either representatives of colleges of 

education or financial aid administrators. All but one of the focus groups 

involved 6 to 10 participants while the remaining group had 5 participants. 

By including college of education representatives and financial aid 
Appendix I: Objectives, Scope, and 

Methodology

Page 42 GAO-15-314 Financial Aid for Teachers

administrators from institutions that do and do not offer TEACH grants, 

we intended to gather a range of perspectives about how well these 

programs are working or why institutions chose not to participate.

To select focus group participants, we obtained membership lists from 

professional associations of colleges of education and financial aid 

administrators and invited representatives from 235 institutions of higher 

education to participate. The primary selection criteria included whether 

the institution offered TEACH grants, and, for those that did, the number 

of students that received them. To obtain input from a wide variety of 

institutions, we also considered the size of the school in terms of total 

enrollment and whether the institution was public, private, or for-profit. As 

all focus groups were conducted via teleconference, we were able to 

include participants from across the United States.

Focus group discussions were structured and guided by a moderator who

used a script with a standardized list of questions to encourage 

participants to share their thoughts and experiences. During the sessions, 

we informed participants that their names would not be used in the 

published report. Each of the eight focus groups was recorded and 

transcriptions were created, which served as the record for each group. 

Using content analysis, we then evaluated these transcripts to develop 

our findings. Our analysis was conducted in three steps. In the first step, 

two analysts developed a set of themes and categories to track the 

incidence of various responses during focus group sessions. In the 

second step, each transcript was tagged by an analyst and recorded by 

theme and category. In the third step, these tags were verified by a 

second analyst and any discrepancies were resolved by both analysts 

agreeing to the tagged theme and category.

Methodologically, focus groups are intended to generate in-depth 

information about the reasons for the focus group participants’ attitudes 

on specific topics and to offer insights into their concerns about and 

support for an issue. Focus groups are not designed to (1) demonstrate 

the extent of a problem or to generalize results to a larger population, (2) 

develop a consensus to arrive at an agreed-upon plan or make decisions 

about what actions to take, or (3) provide statistically representative 

samples or reliable quantitative estimates. The projectability of the 

information produced by our focus groups is limited for several reasons. 

First, the information includes only the responses from college of 

education and financial aid administrators from among the eight selected 

groups. Second, while the composition of the groups was designed to 

ensure a range of stakeholders from institutions of varying size and 
Appendix I: Objectives, Scope, and 

Methodology

Page 43 GAO-15-314 Financial Aid for Teachers

geographic diversity, the groups were not randomly sampled. Third, 

participants were asked questions about their experiences with the 

programs, and other college of education representatives and financial 

aid administrators not in the focus groups may have had other 

experiences. Because of these limitations, we did not rely entirely on 

focus groups, but rather used several different methods to corroborate 

and support our findings and conclusions.

Interviews

In-depth interviews with individual schools. We supplemented 

information obtained through focus groups with non-generalizable indepth interviews with selected representatives of four institutions of higher 

education that offered the TEACH Grant program. Specifically, we spoke 

with representatives from each of the institutions’ (1) college of education, 

(2) financial aid office, and (3) bursar’s office to obtain their perspectives, 

particularly regarding the benefits and challenges of administering the 

TEACH Grant program. Institutions were primarily chosen based on 

whether they offered TEACH grants and, if so, the number of students 

who received the grant and whether the school participated in the Perkins 

loan program. Secondary selection criteria included whether the 

institution was public, private, or for-profit. In advance of each interview, 

we reviewed materials each selected institution made publicly available 

via their websites including information on the TEACH Grant program. 

During interviews, we discussed how these institutions administer and

conduct outreach on the TEACH Grant and Perkins cancellation 

programs and the benefits and challenges associated with the programs.

Students and recent graduates. To obtain the students’ perspective 

particularly around awareness of the TEACH Grant and the loan 

forgiveness programs and their benefits and challenges participating in 

them, we spoke with 23 students enrolled in or recently graduated from 

teacher training programs at 21 institutions, 14 of whom had attended or 

had graduated from institutions that offer TEACH grants. To select 

participants, the National Education Association contacted students or 

recent graduates on a list of state and national student leaders they 

shared with us and requested that each participate in one of two 

conference calls. Evidence gained through these group interviews is not 

generalizable to all students.
Appendix I: Objectives, Scope, and 

Methodology

Page 44 GAO-15-314 Financial Aid for Teachers

Higher education associations and teacher unions. To gain further 

insights on teacher financial aid programs, we interviewed officials from 

seven higher education associations and organizations, and the two 

largest teacher unions on the benefits and challenges of these programs. 

We selected higher education associations and organizations 

representing a range of public and private degree granting institutions and 

organizations that represent colleges of education and financial aid 

administrators including: the American Association of Colleges for 

Teacher Education; National Association of Student Financial Aid 

Administrators; National Direct Student Loan Coalition; Student Aid 

Alliance; American Association of State Colleges and Universities; 

Coalition of State University Aid Administrators; and Coalition of Higher 

Education Assistance Organizations. We also interviewed representatives 

from the two largest national teacher unions: the National Education 

Association and the American Federation of Teachers. While information 

obtained from these interviews are not generalizable, they provide 

valuable insights from college administrators, teachers, and other 

stakeholders about these programs.
Appendix II: Comments from the 

U.S. Department of Education

Page 45 GAO-15-314 Financial Aid for Teachers

Appendix II: Comments from the 

U.S. Department of Education
Appendix II: Comments from the 

U.S. Department of Education

Page 46 GAO-15-314 Financial Aid for Teachers
Appendix II: Comments from the 

U.S. Department of Education

Page 47 GAO-15-314 Financial Aid for Teachers
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 48 GAO-15-314 Financial Aid for Teachers

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

In addition to the contact named above, Janet Mascia, Assistant Director; 

Rachel Beers, Analyst-in-Charge; Justin Dunleavy, and Robin Marion 

made significant contributions to this report. Also contributing to this 

report were Susan Aschoff, Deborah K. Bland, Ben Bolitzer, Alex 

Galuten, Stuart Kaufman, John Mingus, Mimi Nguyen, Mark F. Ramage, 

Kathleen van Gelder, Walter Vance, and Amber Yancey-Carroll.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(131283)
The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance 

to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no 

cost is through GAO’s website (http://www.gao.gov). Each weekday 

afternoon, GAO posts on its website newly released reports, testimony, 

and correspondence. To have GAO e-mail you a list of newly posted 

products, go to http://www.gao.gov and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s website, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537.

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information.

Connect with GAO on Facebook, Flickr, Twitter, and YouTube.

Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts.

Visit GAO on the web at www.gao.gov.

Contact:

Website: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-

4400, U.S. Government Accountability Office, 441 G Street NW, Room 

7125, Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Phone

Connect with GAO

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations

Public Affairs

Please Print on Recycled Paper.