Lawsuit: PA Higher Education Assistance Agency Cheated Teachers

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A proposed class action has been filed in district court against Pennsylvania Higher Education Assistance Agency (PHEAA), which does business as FedLoan Servicing C/O CT Corporation System Dauphin, over the alleged misuse of federal grant money.

According to the lawsuit, the Teacher Education Assistance for College and Higher Education (TEACH) Grant Program awards funds to college students who agree to teach in “high-need subject areas” at low-income schools for four years. If, for any reason, the TEACH grant recipient chooses not to fulfill their obligation, the case notes, the grant is then converted into a loan.

The 25-page complaint, which “seeks to protect teachers,” claims PHEAA took advantage of and cheated Pennsylvania educators when it “instituted a fraudulent and deceptive pattern and practice of converting grants into interest-bearing loans” even though the grant recipients “fulfilled and continued to fulfill their teaching obligations” in high-need subject areas at low-income schools. As a result of the defendant’s alleged conversion of grant money into interest-bearing loans, the lawsuit claims proposed class members are forced to make monthly payments even though they continue to fulfill their teaching duties.