Kindergarten teacher and children with hands raised

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

For students, it’s wise to limit total loan borrowing to no more than your projected first-year salary. As per the National Education Association, the average starting salary for teachers was $42,845 in the 2021-2022 academic year. However, borrowing less than this amount can be challenging for prospective teachers, who often require advanced degrees for employment.

A strategic way to reduce borrowing costs is to utilize scholarships and grants, which are essentially ‘free money’ and typically don’t need to be repaid. A notable example is the federal Teacher Education Assistance for College and Higher Education (TEACH) grant. Unlike other grants such as Pell Grants and Supplemental Educational Opportunity Grants, TEACH grants have specific conditions that, if not met, can convert the grant into a loan.

To help you navigate these conditions, here are answers to some common questions about TEACH grants:

1. What is a TEACH grant? A TEACH grant provides up to $4,000 in federal aid. For grants disbursed between Oct. 1, 2015, and Oct. 1, 2016, the amount was $3,728. To qualify, students must commit to teaching for four years at a low-income elementary school, secondary school, or educational service agency. Additional requirements also apply.

2. Who is eligible? Eligibility for a TEACH grant includes meeting the standard requirements for federal student aid, such as having no loans in default and completing the Free Application for Federal Student Aid (FAFSA). You must also be enrolled in a TEACH Grant-eligible program at a participating school. The specifics can vary by institution, so it’s recommended to consult your school’s financial aid office.

3. What if I don’t fulfill the requirements? Failing to meet the TEACH Grant’s criteria converts the grant into an unsubsidized Stafford loan. This loan must be repaid in full, with interest accruing from the disbursement date. The interest rate for this loan is set at 6.8 percent.

4. Can a loan revert back to a grant? Once the grant converts into a loan, it remains a loan. However, there are circumstances, like enrollment in an eligible program or military service, where you can suspend your service obligation temporarily.

5. How do I apply? Application for a TEACH grant involves completing the FAFSA, an agreement to serve, and undergoing TEACH grant counseling.