The Department of Education (ED) provided long-anticipated guidance on how schools could disburse Perkins loan funds if the program ends next year at yesterday’s annual Federal Student Aid (FSA) conference. With the program set to expire on September 30, 2015, there have been many outstanding questions about how the program will be implemented for the 2015-16 award year.
Should the program expire, ED stated that prior to October 1, 2015, schools can make any Perkins Loan disbursements that are otherwise allowable under the regulations. On or after October 1, 2015, schools cannot make a first disbursement of a Perkins Loan for the 2015-16 award year. If the school made a first disbursement of a Perkins Loan prior to October 1, 2015, then subsequent disbursements of that loan are permitted for the 2015-16 award year.
ED also stated their intention to implement a narrow grandfathering provision that would apply to currently enrolled Perkins Loan borrowers. Details on the grandfathering provision will be released in a Dear Colleague Letter around January 1, 2015.
NASFAA has been advocating for the continuation of the Perkins program and published a detailed Q & A to address members’ questions last month. While ED’s guidance on how to treat the program for the upcoming award year provides some clarity to schools, the ultimate fate of Perkins remains in the hands of legislators, who must decide whether to reauthorize the program. If the Perkins program is simply reauthorized along with the rest of the student aid programs, schools will continue to disburse Perkins uninterrupted.
Publication Date: 12/3/2014