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Two TEACH Grant recipients have filed a lawsuit against the Pennsylvania Higher Education Assistance Agency (PHEAA) for turning their grants into loans over minor paperwork errors. PHEAA is one of several student loan servicers working on behalf of the Department of Education.
The Teacher Education Assistance for College and Higher Education (TEACH) Grant provides eligible students with up to $4,000 a year if they complete coursework needed for careers in teaching. To receive a TEACH Grant, students agree to teach high-need subjects or at elementary or secondary schools that serve low-income families for four years. Those who receive the grants must submit paperwork verifying their employment each year, or their grants will be converted to federal loans with interest. If teachers make mistakes on the paperwork verifying their employment, they have 30 days to fix the errors.
One plaintiff forgot to put his signature on an employment certification form sent by PHEAA. He claims PHEAA sent him a letter telling him he had 30 days to fix the initial error. The letter arrived two weeks into the 30-day period. He resubmitted his paperwork, but was two days past the deadline. His $4,000 TEACH Grant converted into a federal loan with accrued interest. Complaints to the Department of Education, PHEAA and Consumer Financial Protection Bureau (CFPB) did nothing to remedy the situation. The second plaintiff made a similar administrative oversight by forgetting to attach her signature. Her $7,000 TEACH Grant was converted into a federal loan with $1,997 in accrued interest.
Be Careful When Submitting Paperwork to Student Loan Servicers
If you have a TEACH Grant or any other loan through the Education Department that requires an annual verification of income or employment, it is crucial to get this paperwork turned in on time. USPS Certified Mail will keep records of when you mailed this paperwork, just in case you need evidence for your servicer. Depending on the situation, it may be possible to submit this information electronically.
The CFPB has warned student loan borrowers of several problems involving servicers. These problems include failing to provide borrowers with access to loan information and losing paperwork. Keep detailed records when dealing with loan servicers.
If you are struggling with student loan payments, the Kansas City bankruptcy attorneys at The Sader Law Firm can help you find ways to manage your higher education debts.
