According to 34 CFR 686.2 (d) [Title 34 – Education; Subtitle B -- Regulations of the Offices of the Department of Education; Chapter VI -- Office of Postsecondary Education, Department of Education; Part 686 -- Teacher Education Assistance for College and Higher Education (TEACH) Grant Program; Subpart A -- Scope, Purpose, and General Definitions], the term numeric equivalent means
“(1) If an otherwise eligible program measures academic performance using an alternative to standard numeric grading procedures, the institution must develop and apply an equivalency policy with a numeric scale for purposes of establishing TEACH Grant eligibility. The institution's equivalency policy must be in writing and available to students upon request and must include clear differentiations of student performance to support a determination that a student has performed at a level commensurate with at least a 3.25 GPA on a 4.0 scale in that program.
(2) A grading policy that includes only "satisfactory/unsatisfactory", "pass/fail", or other similar nonnumeric assessments qualifies as a numeric equivalent only if--
_i_ The institution demonstrates that the "pass" or "satisfactory" standard has the numeric equivalent of at least a 3.25 GPA on a 4.0 scale awarded in that program, or that a student's performance for tests and assignments yielded a numeric equivalent of a 3.25 GPA on a 4.0 scale; and
_ii_ For an eligible institution, the institution's equivalency policy is consistent with any other standards the institution may have developed for academic and other title IV, HEA program purposes, such as graduate school applications, scholarship eligibility, and insurance certifications, to the extent such standards distinguish among various levels of a student's academic performance.