AKRON, Ohio (CN) – Two teachers filed a class-action lawsuit accusing the student-aid organization that services their federal grants of converting the grants into interest-bearing loans based on a technicality.
According to the complaint filed Friday in Akron federal court, Ashley Ford and David West were awarded thousands of dollars in federal grants through a student-aid program known as Teacher Education Assistance for College and Higher Education, or TEACH. Ford is a special education teacher at Stanton Middle School in Kent, Ohio, while West teaches art at White Knoll High School in Lexington, S.C.
Those who receive grants under the TEACH program agree to complete specific service obligations to receive up to $4,000 per year toward the cost of college courses necessary to begin a career in teaching.
The service obligations, which are laid out on the Federal Student Aid website, require that grant recipients teach at least four years in a high-need field at an elementary school, secondary school, or educational service agency that serves students from low-income families.
The government’s website explains that TEACH grants do not need to be repaid unless a recipient fails to complete their service obligation, at which point the grant is converted into a direct unsubsidized loan that accrues interest from the date the grant was disbursed.
Grant recipients are also required to submit annual paperwork certified by the chief administrative officer of their school to prove they are fulfilling their service obligations.
Ford and West claim defendant Pennsylvania Higher Education Assistance Agency, or PHEAA, and its subsidiary, FedLoan Servicing, hastily converted their grants into interest-bearing loans after they submitted annual certification paperwork that contained minor mistakes or omissions.
The teachers say they quickly corrected their respective mistakes and informed PHEAA they were in fact fulfilling their obligations, but the organization refused to convert the loans back to grants and saddled them with debt based on a technicality.
“This action seeks to protect teachers,” the class-action lawsuit states. “Teachers are a vital centerpiece to the success and growth of this country. The strength of every profession grows out of the knowledge and skills that teachers instill in our country’s youth. Yet, teachers are too often underappreciated, undercompensated, and undervalued. Worse, teachers are being taken advantage of and cheated by PHEAA.”
Attorney Troy Doucet of Dublin, Ohio represents Ford and West in their lawsuit. He claims PHEAA, which was hired by the federal government to be the exclusive servicer of TEACH grants in 2013, is knowingly converting grants to unsubsidized, interest-bearing loans without justification as part of a scheme to defraud grant recipients and increase its profits.
Doucet cites a 2015 report prepared by the U.S. Government Accountability Office, which found that at least 2,252 grants were erroneously converted to loans in 2014. The same report also found that the U.S. Department of Education and loan servicers do not give grant recipients enough information about disputing grant-to-loan conversions.
Ford and West’s lawsuit accuses PHEAA of violating the Racketeer Influenced and Corrupt Organizations, or RICO, Act. They also seek damages for claims of breach of contract and unjust enrichment.
Keith New, director of public and media relations for PHEAA, said the agency declines to comment on pending litigation, but that it administers the TEACH grant program according to the rules and procedures established by the U.S. Department of Education, which owns all of the assets in the program.
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