Federal TEACH grant...help me understand

[pixiedustaholic]

(Long post) DD will be starting college this year. She knows she wants to be a teacher, but she is not 100% sure what age group she wants to teach. Right now she is leaning toward Secondary English. In our area, this would qualify her for the Federal TEACH Grant. She would have to sign an agreement to teach for 4 years out of the first 8 years after graduation. She can get up to $4,000 per year. However, if she doesn't fulfill the 4 year obligation for whatever reason, the grants will be converted into unsubsidized Direct loans with interest beginning when the grants were disbursed.

I was planning to pay as we go for the portion of her education that is not covered by scholarships and grants. However, this federal TEACH grant looks attractive since I could save $16,000 over the course of her education IF she goes on to fulfill her agreement to teach 4 years in a high need field in a school that serves low income students.

If she decides teaching isn't for her or decides to teach elementary school instead, I'm afraid it would be a bad financial decision. My plan is to go ahead and put that money to the side in savings in case she changes her mind so that we could pay off the loan immediately if it is in fact converted into a loan. I'm just not 100% sure how much money this would cost me since interest would accrue from the time the grant was disbursed. I have never been good at figuring out interest, etc. I do know that it would be the interest rate in effect for direct unsubsidized loans during the year the money is disbursed. Example: If she gets $4000 for the upcoming year and it ends up being converted into a loan, the interest rate would be 4.66%. However, if it isn't converted into a loan until after she graduates 4 years from now, how much interest would that be? I know it's just simple math but I'm not 100% on how it works. Can anyone that is familiar with student loans help me out?

South Carolina also has a similar Teacher loan program where she can get up to $2500 per year. In reality, between the two, I could save up to $26,000 if it all worked out and she in fact becomes a secondary English teacher. I just want to make sure it's worth the gamble if you know what I mean. Hope this made sense.

 

[CAFarmerGirl]

I would take the grants and have your daughter commit to teaching at least 4 years in the designated field. It would save you a ton of money and the commitment isn't that bad. I received the TEACH grant and will also be getting money from the federal loan forgiveness program ($17k for 5 years) and a state program. Over $30k in loans will be forgiven for me (I teach special ed).

Right now for my 2009 $4k TEACH grant, I have accrued $1400 in interest.

And, I love my job.

 

[Sandy61]

Oh...Teach grant was a huge problem for us. We told the college DS was interested in teaching and they automatically gave us the teach grant. We went in to talk with them to say we did not want it but they said we HAD to have it and would not take it off his package. We would have had to come up with that amount out of pocket and we could not financially add that to our burden. He still decided to go into teaching but if he had changed his mind this would have been a financial problem. Research all ramifications before getting into it.

 

[supersnoop]

So, the upside is $26,000 in free money, and the downside is paying interest on that money. It seems worth the risk to me.

 

[PlutoPony]

What if she can't get a teaching job?
Or if her only options are in places / schools she doesn't want to teach?

 

[RunnerMommyof4]

I am an ELL teacher who actually used it and used it again to get my Masters. Was it worth it...totally. But I've known I wanted to teach since I was in 3rd grade. It's not always about the subject. Sometimes teaching in a rural or inner city area qualifies based on their Free And Reduced Lunch numbers, sometimes its a shortage of teachers. Worst case scenario you pay it back like any other loan, best case...well that speaks for itself! I'd use it again and again if I could

 

[pixiedustaholic]

Oh...Teach grant was a huge problem for us. We told the college DS was interested in teaching and they automatically gave us the teach grant. We went in to talk with them to say we did not want it but they said we HAD to have it and would not take it off his package. We would have had to come up with that amount out of pocket and we could not financially add that to our burden. He still decided to go into teaching but if he had changed his mind this would have been a financial problem. Research all ramifications before getting into it.

Wow! DD's college hasn't mentioned them to us yet. We still need to talk to their FA office to make sure this is even a real option for us.

So, the upside is $26,000 in free money, and the downside is paying interest on that money. It seems worth the risk to me.

That is my current thinking but I just hate the thoughts of having to pay interest that I wouldn't owe if we just cash flow it.

What if she can't get a teaching job?
Or if her only options are in places / schools she doesn't want to teach?

In those cases, it would turn into a loan. I have also thought that maybe she gets married after college, decides to have children and stay home with them...it would become a loan. There are lots of different possible scenarios. I just have to figure out if possibly owing the interest is worth the gamble.

I am an ELL teacher who actually used it and used it again to get my Masters. Was it worth it...totally. But I've known I wanted to teach since I was in 3rd grade. It's not always about the subject. Sometimes teaching in a rural or inner city area qualifies based on their Free And Reduced Lunch numbers, sometimes its a shortage of teachers. Worst case scenario you pay it back like any other loan, best case...well that speaks for itself! I'd use it again and again if I could

Thank you for sharing. She has known since she was a little girl, too. She is just trying to figure out what age group she thinks she would like most. She starts the in classroom section of her Teacher Cadet program this morning in a 2nd grade classroom. Hopefully, this will give her a better idea. Ultimately, I think her dream job would be to teach Theatre in one of the high schools. However, there is usually only 1 Theatre teacher per school around here so she is being realistic about the possibility of actually getting a job. (Although, Theatre is listed as a critical need area in SC.) That's when she started kicking around the idea of majoring in English Education and minoring in Theatre.

I am thinking we will probably pursue the grant/loans but want to figure out how much extra this could potentially cost us in interest if she can't/doesn't fulfill her agreement for whatever reason. How do I figure up how much interest would accumulate? I know the interest rate for this year and I know the maximum interest rate that could be charged. I guess I will look for an online calculator to help me out.

 

[Good Morning Dewdrop]

a friend of mine got it - then decided not to teach and had to pay it all back. She realizes now what a bad decision that was (should have just gone ahead and taught for the 4 years). OP you have your head on straight - I applaud you for looking at this from all angles now!

 

[ariel71]

I personally wouldn't do it. Look at what she'd be locking herself into - 4 years, high need subject, low income school, and if you add in the state grant, having to be in SC? That amount of money wouldn't be enough for me to hamstring myself to those limitations for that long. Growing up, I always "knew" I wanted to do something related to math or science. I have a BS in Nutrition Science but realized in grad school that I didn't really want it as a career. I had never taken a business class in my life until I was 23, at which point I took an Accounting class and found my calling. I got a second BS and have worked in that field ever since. You never know where life will take you. Tbh, I know a lot of professionals who aren't even working in their degreed field, let alone doing what they thought they wanted to at 17.

At the very least, can she go through one year without it, see how it goes, and reconsider for her sophomore year? I don't think I'd do a state grant that required me to stay in-state after graduation in any scenario.

 

[HM]

I started college as an early education major. By mid-junior year, I decided I wasn't sure that was the career I wanted for my life, so I switched majors. I'm wondering whether your child really wants to teach...if she isn't even sure of what age or area she wants. It's really good you are thinking this through, OP.

 

[supersnoop]

What's the interest rate on these? Are you already leveraging the full amount of subsidized loans available? How much money will this really cost you in interest for the 8-12 years that she'll have use of the money?

 

[yoopermom]

What if she has a great student teaching experience in a school district that doesn't qualify under this grant, and they offer her a job? Then she would have to repay it (with interest going back to the origin of the loan) or teach in a rougher district just to be able to utilize what's been given to her already. May sound unrealistic, but I know many really great teachers who were offered teaching jobs right from their senior year experiences, from great districts who didn't want to lose them....

Sort of reminds me of "Northern Exposure" where he was working off his doctor loans !

Terri

 

[Sadie22]

A young man I know well did not apply for some grants because he would have promise to work in the state for a few years in a given field. He did not apply. Guess what field he works in, and where he works? In retrospect, he gave up a lot of free money just because he was not sure where he would end up working.

 

[tavettava]

Its hard to find a job in teaching in a lot of areas. School districts are working at a bare bones staff.

 

[HopperFan]

So, the upside is $26,000 in free money, and the downside is paying interest on that money. It seems worth the risk to me.

There is a big risk. THEY usually dictate which "high need" field/school you will teach at for four years after you graduate. I think here you can pick a region of the state. "High need" does not just mean they are poor students. It means it could be a high risk school failing school, urban school, high crime school (which all tend to also be low income so their offer is terminology) - all the things that cause teachers to not apply to work there. The program exists because no one wants to teach in these schools. It could also land you in such a poor performing district that they may have lost accreditation, not great on your resume and it can be difficult to get a job after, let alone in a high performing school. And don't forget if the overall district is under-performing your pay may be on a lower scale (granted you can justify this with the forgiveness of loans).

You will have to live close to the district or commute a long way. I know a gal who commutes an hour each way just so she can live somewhere safer and where she has an outside life. Do not forget, particularly as a young person - if you are looking for Mr/Ms Right .... you may be placing yourself in a location that you will have to put that off for 4 years. It can be tough on your social life. You have consider all angles, not just teaching, but also your housing and personal life.

DS is in college for teaching and we passed on this. His friend did it and is in a very poor rural county with no kind of life around him. We know several teachers who have taken jobs in these situations and now years later still can't get a job in a better district because no one wants to hire them. If your goals were to teach in these situations its a great offer! Just be sure of what you are committing to OR put that money away to pay it off should you change your mind.

OP, I kudo you for exploring all options and prepare for all outcomes.

 

[MrsPete]

There's no downside. Go ahead and do it. Think it through:

Possbility 1 -- Best possible outcome: Your daughter takes the grant, her tuition is reduced by $16,000 over the course of her four years. She enjoys her education classes and her student teaching experience, and she gets a job afterward. You are $16,000 richer, and she has the education she wanted.

Possibility 2 -- Mediocre outcome: Your daughter takes the grant, her tuition is reduced by $16,000 over the course of her four years. After graduation, she cannot get a job (unlikely if she's applying in the South). She shows evidence that she has been applying for jobs, and she requests an extension, which she will be granted -- for probably 2-3 years. After that point, if she still can't find a job (very unlikely if she's applying in the South and if she's substitute teaching in the meantime), they're going to expect some money -- but it's the money you were going to pay anyway, and you've had a four year extension.

Possibility 3 -- Another mediocre outcome: Your daughter takes the grant, her tuition is reduced by $16,000 over the course of her four years. She's offered a job, but it's in a place she doesn't want. You have choices:

3.1 -- She takes the job in a place she doesn't want. She's committed to that job for one year. She can use that year to try to find a better position for year 2. Worst case in this scenerio, she stays 4 years and gains experience.
3.2 -- She turns down the job and instead chooses a job in a different place. You now owe the $16,000 that you would've owed anyway -- yet you've had a four year extension. I don't think interest starts building until after graduation, but you should check on that.

Possibility 4 -- Another mediocre outcome: Your daughter takes the grant, but as she begins her educational classes and classroom observations, she discovers that teaching looks different from the other side of the desk, and she decides she wants to study Accounting (fairly unrealistic -- teachers tend to be teachers from a young age; I was). She changes majors and is no longer eligible for the grant. You owe $4000 in repayment for the grant that she accepted during her freshman year; however, it is $4000 that you were going to pay anyway.

Possibility 5 - The worst of all outcomes: She doesn't take the grant, you pay full price for her tuition. She loves her education classes, becomes a teacher, and you've lost $16,000.

How bad are these really?

I'd ask a question: You say this is a FEDERAL grant. Does this mean she could apply to jobs anywhere in the US? I ask this because it's quite possible that she could go away to school and meet a guy, after graduation he gets a great job in the Midwest, and she wants to go with him.

Finally, as a secondary English teacher, I would warn her to consider this: This job is disappearing. Seriously, the job I have now -- standing in front of 30 students in a classroom -- is going to become more and more rare. The job is morphing into something else: it is already being replaced by online learning and blended learning (because they are cheaper options). Tell her to investigate this and decide if this is something she would embrace. It isn't all bad; after all, it opens the possibility of working from home -- something I can't do now, but it does mean she won't have the job exactly as she has imagined it -- at least not for a whole career.

Incidentally, substitute "nurse" for "teacher", and my daughter is enrolled in just such a program.

 

[MrsPete]

Ultimately, I think her dream job would be to teach Theatre in one of the high schools. However, there is usually only 1 Theatre teacher per school around here so she is being realistic about the possibility of actually getting a job. (Although, Theatre is listed as a critical need area in SC.) That's when she started kicking around the idea of majoring in English Education and minoring in Theatre.

Very wise of her. For anyone planning to teach high school, I would recommend ONLY that they prepare for one of the Big Four -- English, Science, History, Math -- OR Special Ed OR World Language. As you said, the possibility of getting a job in one of those areas is very good (in the South). If she dreams of Theater, minoring and hoping to "move up" to that job is a very good plan. She'll be able to work in another classroom until that dream job comes available.

 

[MrsPete]

What if she has a great student teaching experience in a school district that doesn't qualify under this grant, and they offer her a job? Then she would have to repay it (with interest going back to the origin of the loan) or teach in a rougher district just to be able to utilize what's been given to her already. May sound unrealistic, but I know many really great teachers who were offered teaching jobs right from their senior year experiences, from great districts who didn't want to lose them....

Sort of reminds me of "Northern Exposure" where he was working off his doctor loans !

Terri

Not really realistic. You're thinking that an "area of need" is going to be an awful place. I teach in a small city in a district that is typically rated #12-20 (we go up and down over the years) out of 100 districts. It is a safe place in an area with a wide variety of income levels. While we're far from perfect, I'm not afraid for my teenaged daughter to go out to a school event alone after dark. Yet we are a Title 1 school, which would make us an area of great need.

Or you can opt for a position of great need: Math teacher, science teacher, reading specialist.

 

[Lynnp]

Here in the Deep South (MS) everything is moving toward dual-credit education. Students take high school classes 11/12 grade with teachers that are certified as community college instructors and get both a 3 hour college course and their high school credit simultaneously. A great deal for students, but is going to really put a lot of pressure on teachers to have a masters in their content area. At my high school in English we have 2/8 that are certified, in Math 1/8, in history 1/8 and Science there are none. (I'm an ELL teacher, so my masters are in Intercultural Studies and Teaching, not English) Most mid-career teachers got their masters in education, not their content area. That is something for her to really consider. The job is definitely changing.

 

[daughtersrus]

I just wanted to clarify that the grant requires that you teach in a low income school for 4 years, not just that you teach.

DD#2 took a TEACH Grant that sadly will probably convert to a loan. She was hired for a teaching job right after graduation and has been teaching ever since. The problem is that her school in not considered low income although 6 of her 7 students are. (she teaches self-contained SpEd). She is considering applying for a different position in her same district at a low income school if one becomes available.

Every year she has to fill out the form. She was told to mark the box saying that she's not currently teaching but intents to. In the meantime, interest is adding up that will be included if the grant becomes a loan.

For DD, there was no downside. She was going to have to take a loan to cover the amount anyway. It's just sad the district chose to put the self-contained classes in one of the schools that is not low income.