Kindergarten teacher and children with hands raised

(Written by Ryan Lane for US News & World Report)

For students, a good rule of thumb is to limit total loan borrowing to no more than your projected first year salary. According to the National Education Association, that average starting salary for teachers was $36,141 in 2012-2013. Borrowing less than that amount can be difficult for prospective teachers – who will potentially need advanced degrees to get jobs.

One of the best ways for these students to mitigate borrowing costs is to take advantage of free money offered to them through scholarships and grants. One such option is the federal Teacher Education Assistance for College and Higher Education grant. Grants are a great option because they don’t need to be repaid.

Well, usually.

These grants function a bit differently from their fellow federal grants, Pell Grants, and Supplemental Educational Opportunity grants. While you may need to repay those grants immediately if you don’t fulfill their requirements, the free money from TEACH grants can turn into a long-term loan debt if you’re not careful.

To help you avoid this fate, here are answers to common questions about these grants, so you know exactly what you’re getting into.

1. What is a TEACH grant? A TEACH grant is a federal grant that can be worth up to $4,000, though the amount for grants disbursed after Oct. 1, 2015, and before Oct. 1, 2016, is $3,728. At a basic level, students must agree to teach for four years at an elementary school, secondary school or educational service agency that serves students from low-income families to receive this grant. There are other requirements as well.

2. Who is eligible? To receive a grant, you must do a number of things. These include meeting basic requirements for receiving any form of federal student aid, such as fulfilling the general eligibility requirements – for example, having no loans in default – and completing the Free Application for Federal Student Aid.

Other requirements tie into your educational program. For instance, you must attend a school that participates in the TEACH Grant Program, as well as be enrolled in a grant-eligible program. There are different types of eligible programs, and these can vary from school to school. Contact your school’s financial aid office to find out which eligible programs they offer.

Students must meet other criteria as well, including signing an “agreement to serve.” Visit the Federal Student Aid website to learn more.

3. What happens if I don’t fulfill the requirements? When you sign a TEACH Grant Agreement, you agree to the terms of this federal student aid – which means agreeing to meet certain criteria.

This includes what you’ll teach – a “high-need” field, such as mathematics, science and bilingual education – as well as where you’ll teach – at a low-income school or educational service agency – and how long you’ll teach under these circumstances – at least four years within eight years after you complete or leave the program for which you received the TEACH Grant.

If you fail to meet these criteria, your grant will turn into an unsubsidized Stafford loan. You will have to repay this loan in full, plus interest, which will be charged from the date of each grant’s disbursement. The interest rate for this new loan will be 6.8 percent.

4. Can a loan become a TEACH grant again? Unfortunately, no. Once a grant becomes a loan, it becomes a loan for good. However, if you’re worried about not meeting the TEACH grant criteria in time, you may be able to suspend or cancel your service obligation – but only for certain reasons.

These include enrolling in a TEACH grant-eligible program; enrolling in a program required to receive a certification or license to teach in a state’s elementary or secondary schools; qualifying for leave under the Family and Medical Leave Act; and being ordered to active duty for more than 30 days in connection with a war, military operation or national emergency.

Suspensions are granted in one-year increments. You can receive a suspension of up to three years for military service; for all other conditions, you can receive a suspension of up to three years combined. These suspensions simply put your obligation on hold – you will still need to complete the TEACH grant criteria or it will be converted to a loan.

5. How do I apply? You can apply for a TEACH grant by completing the Free Application for Federal Student Aid. You will also need to complete an agreement to serve and TEACH grant counseling.