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Federal TEACH Grant Conversion Example

Example of Conversion to loan:

You received $16,000 in TEACH Grant funds between September 2013 and June 2017. If your TEACH Grant funds are converted to a Direct Unsubsidized Loan in December 2021 because you did not fulfill your teaching obligation, then approximately $9,347 in interest would have accrued before the Direct Unsubsidized Loan enters repayment (following the six-month grace period) in June 2022. This example is based on an interest rate of 8.25% (the maximum interest rate for Direct Unsubsidized Loans made to undergraduate students). (Note: All amounts are estimates; your actual monthly and total repayment amounts may differ from the amounts shown in the chart.)

TEACH Grant Amount 

$16,000

Accrued interest from September 1, 2013 to June 1, 2022 (at 8.25%, the maximum interest rate for Direct Unsubsidized Loans made to undergraduate students)

$9,347 (capitalized)

Principal to be Repaid

$25,347

Monthly Payment (Standard Repayment Plan)

$311

Number of Payments

120

Total Amount Repaid

$37,320

Reasons for Conversion

Your TEACH Grant will convert to a Direct Unsubsidized Loan if you do not satisfy your service obligation. Some of the reasons are listed below, and are covered in the TEACH Grant Counseling.

  • You decide that you do not wish to become a teacher.
  • You become a teacher, but not in a high-need subject.
  • You become a teacher, but not in a low-income school.
  • You become a teacher in a high-need subject in a low-income school, but start this position too late to finish four years of service within eight years of graduation.
  • You forget to confirm to your TEACH Grant servicer at least once each year that you intend to satisfy your service obligation.
  • You cease enrollment in your program but forget to contact your TEACH Grant servicer within 120 days.