Laura Whitehurst, 31, had a year-long affair with the boy starting when he was 16, often meeting up for unprotected romps at her flat.
She claimed her pregnancy was a miracle as she had previously feared she couldn't conceive, The Mirror reports.
Whitehurst was jailed just two months after giving birth to the baby girl and served six months of a year-long sentence after a plea deal. Had it not been agreed she could have faced 29 years in prison on 41 child sex abuse charges.
The settlement came about after the student, known only as John BB Doe, claimed school administrators and other teachers knew about the relationship but did nothing about it.
The six million dollar payment was made after he sued the education authority in California for being negligent and complicit in the abuse.
Lawyer Vince Finaldi said: "The evidence we were able to deduce against the district of its knowledge that this was going on and its complicity was so voluminous, they had no choice but to settle the case. It was that bad."
Whitehurst formerly taught English at Citrus Valley High School, Redlands, but is now a registered sex offender for life.
The student had told a court that he had been left traumatised by Whitehurst claiming she loved him and wanted to spend the rest of her life with him.
When she was arrested, two other pupils came forward and said they too had had sexual encounters, including a blowjob at 14, with Whitehurst.
School administrators claim the payment is not an admission of guilt and was simply to protect the reputation of the district. They hope the settlement will draw a line under the case.
Source : The LAD Bible