(a)(1) The TEACH Grant amounts disbursed to the recipient will be converted into a Direct Unsubsidized Loan, with interest accruing from the date that each grant disbursement was made and be collected by the Secretary in accordance with the relevant provisions of subpart A of 34 CFR part 685 if—
(i) The grant recipient, regardless of enrollment status, requests that the TEACH Grant be converted into a Direct Unsubsidized Loan because he or she has decided not to teach in a qualified school or educational service agency, or not to teach in a high-need field, or for any other reason; or
(ii) The grant recipient does not begin or maintain qualified employment within the timeframe that would allow that individual to complete the service obligation within the number of years required under § 686.12.
(2) At least annually during the service obligation period under § 686.12, the Secretary notifies the grant recipient of—
(i) The terms and conditions that the grant recipient must meet to satisfy the service obligation;
(ii) The requirement for the grant recipient to provide to the Secretary, upon completion of each of the four required elementary or secondary academic years of teaching service, documentation of that teaching service on a form approved by the Secretary and certified by the chief administrative officer of the school or educational service agency in which the grant recipient taught and emphasizes the necessity to keep copies of this information and copies of the recipient's own employment documentation;
(iii) The service years completed and the remaining timeframe within which the grant recipient must complete the service obligation;
(iv) The conditions under which the grant recipient may request a temporary suspension of the period for completing the service obligation;
(v) The conditions as described under paragraph (a)(1) of this section under which the TEACH Grant amounts disbursed to the recipient will be converted into a Direct Unsubsidized Loan;
(vi) The potential total interest accrued;
(vii) The process by which the recipient may contact the Secretary to request reconsideration of the conversion, the deadline by which the grant recipient must submit the request for reconsideration, and a list of the specific documentation required by the Secretary to reconsider the conversion; and
(viii) An explanation that to avoid further accrual of interest as described in § 686.12(b)(4)(ii), a grant recipient who decides not to teach in a qualified school or field, or who for any other reason no longer intends to satisfy the service obligation, may request that the Secretary convert his or her TEACH Grant to a Direct Unsubsidized Loan that the grant recipient may begin repaying immediately, instead of waiting for the TEACH Grant to be converted to a loan under the condition described in paragraph (a)(1)(ii) of this section.
(3) On or about 90 days before the date that a grant recipient's TEACH Grants would be converted to Direct Unsubsidized Loans in accordance with paragraph (a)(1)(ii) of this section, the Secretary notifies the grant recipient of the date by which the recipient must submit documentation showing that the recipient is satisfying the obligation.
(4) If the TEACH Grant amounts disbursed to a recipient are converted to a Direct Unsubsidized Loan, the Secretary notifies the recipient of the conversion and offers conversion counseling as described in § 686.32(e).
(5) Except as provided in paragraph (a)(8) of this section, if a grant recipient's TEACH Grant was converted to a Direct Unsubsidized Loan, the Secretary will reconvert the loan to a TEACH Grant based on documentation provided by the recipient or in the Secretary's records demonstrating that the recipient was satisfying the service obligation as described in § 686.12 or that the grant was converted to a loan in error.
(6) If a grant recipient who requests reconsideration demonstrates to the satisfaction of the Secretary that a TEACH Grant was converted to a loan in error, the Secretary—
(i) Reconverts the loan to a TEACH Grant;
(ii) Applies any academic years of qualifying teaching service that the grant recipient completed before or during the period when the grant was incorrectly in loan status toward the grant recipient's four-year service obligation requirement;
(iii) Upon reconversion of the loan to a TEACH Grant, provides the grant recipient with an additional period of time, equal to eight years minus the number of full academic years of teaching that the recipient completed prior to the reconversion of the loan to a TEACH Grant, including any years of qualifying teaching completed during the period when the TEACH Grant was incorrectly in loan status, to complete the remaining portion of the service obligation.
(iv) Ensures that the grant recipient receives credit for any payments that were made on the Direct Unsubsidized Loan that was reconverted to a TEACH Grant;
(v) Notifies the recipient of the reconversion to a grant and explains that the recipient is once again responsible for meeting all requirements of the service obligation under § 686.12; and
(vi) Requests deletion of any derogatory information reported to the consumer reporting agencies related to the grant while it was in loan status and furnishes a statement confirming that the grant was converted to a loan in error that the recipient may provide to creditors until the recipient's credit history has been corrected.
(7) If a grant recipient who requests reconsideration does not demonstrate to the satisfaction of the Secretary that a TEACH Grant was converted to a loan in error, the Secretary—
(i) Notifies the recipient that the loan cannot be converted to a TEACH Grant;
(ii) Explains the reason or reasons why the loan cannot be converted to a TEACH Grant; and
(iii) Explains how the recipient may contact the Federal Student Aid Ombudsman if he or she continues to believe that the TEACH Grant was converted to a loan in error.
(8) In the case of a grant recipient whose TEACH Grant was converted to a Direct Unsubsidized Loan in accordance with paragraph (a)(1)(i) of this section, the Secretary will reconvert the loan to a grant and restore the recipient's service obligation if—
(i) The grant recipient submits a request to the Secretary to reconvert the loan to a TEACH Grant;
(ii) Excluding any periods of suspension granted under § 686.41, there is sufficient time remaining for the grant recipient to complete the required four academic years of qualifying teaching service within eight years from the date the grant recipient ceased enrollment at the institution where the recipient received the grant or, in the case of a student who received a TEACH Grant at one institution and subsequently transferred to another institution and enrolled in another TEACH Grant-eligible program, within eight years from the date the recipient ceased enrollment at the other institution; and
(iii) In the case of a recipient who would not have sufficient time remaining to complete the service obligation within the eight-year period as described in paragraph (a)(8)(ii) of this section unless the recipient qualifies for a suspension under § 686.40, which may be granted retroactively, the recipient requests and is determined to be eligible for the suspension.
(9) A TEACH Grant recipient remains obligated to meet all requirements of the service obligation under § 686.12, even if the recipient does not receive the notices from the Secretary as described in paragraph (a)(2) of this section.
(b) A TEACH Grant that is converted to a loan, and is treated as a Direct Unsubsidized Loan, is not counted against the grant recipient's annual or aggregate loan limits under 34 CFR 685.203.
(c) A grant recipient whose TEACH Grant has been converted to a Direct Unsubsidized Loan—
(1) Enters a six-month grace period prior to entering repayment, and
(2) Is eligible for all of the benefits of the Direct Loan Program.
