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Valley teacher took a grant to help pay for college, but it turned into a loan and thousands in debt

Anna Krauel took a grant in exchange for working in an underserved school. But a paperwork error changed her grant into a loan, putting her thousands of dollars in debt.

PHOENIX — Anna Krauel wanted to teach English at a tier one school. When she heard about the teach grant providing financial aid, known as a TEACH Grant, it seemed like the obvious move to make. 

“This is a no-brainer. It’s financial aid in something I'm already passionate about,” said Krauel, a freshman English teacher and dance coach. 

Krauel said she took about $8,000 in grant money from the TEACH program. 

For the first two years, she said everything went well, but in the third year of the program, things started to go wrong. 

Krauel said the employee at FedLoan helping her with her grant told her the wrong information. As a result, the yearly certification paperwork did not get in on time. The next year, she would learn her $8,000 grant had turned into a loan. 

"It was a nice little 6.8% interest rate, and it was accruing from 2009 to 2017," Krauel said.

With interest, the loan put Krauel almost $13,000 in debt. Her efforts to fight the grant-turned-loan went nowhere.

"It’s been emotional. It’s been frustrating, I've hit dead end after dead end." Krauel said.

She is by no means alone. According to a survey by the department of education, 63% of all TEACH Grants given out have been converted to loans. Around a third of those are because of paperwork issues. 

As of 2016, only 6% of grant recipients had completed their requirements.

This year, the federal government is providing a new process that would allow loans to be transferred back into grants if the teacher had fulfilled the other requirements. 

Krauel called to try and get her loan fixed but was told to call back later. She said at this point, with the issues she has already faced, she is not optimistic about a resolution. 

Sen. Kyrsten Sinema is also filing a bill to convert the loans back into grants.

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