ED Publishes Additional Perkins Loan Wind-Down Guidance, Clarifications via Q&A
By Mandy Sponholtz, Policy & Federal Relations Staff
As a follow up to Dear Colleague Letter (DCL) GEN-15-03, ED recently published additional guidance about the wind-down of the Federal Perkins Loan Program in a questions and answers document.
As NASFAA previously reported, the DCL explains that the Perkins Loan program, as currently authorized, will expire September 30, 2015. Schools cannot make loans to new borrowers after that date. Some current borrowers who received at least one Perkins Loan disbursement on or before June 30, 2015, may continue to receive Perkins funds for up to an additional five years, if they meet certain conditions.
The Q&A provides the following policy clarifications to the DCL:
- Schools may use the Administrative Cost Allowance received from the Federal Work-Study and Federal Supplemental Educational Opportunity Grant programs to pay expenses associated with servicing Perkins Loans.
- Students enrolled in a major such as undeclared, undecided or general education would qualify for Perkins Loans as a “grandfathered” student. However, once the student enrolls in a specific major, the student must remain in that program of study to receive Perkins Loans as a grandfathered student. The student may change majors and retain Perkins Loan eligibility, provided the first four digits of the Classification of Instructional Program (CIP) code remains the same.
- If the school reports a student’s CIP code as “broadcast journalism” (09.0402), and changes it to “journalism, other” (09.0499), the student remains eligible for Perkins because the first four digits are the same (09.04xx). But if the school changes the student from “broadcast journalism” (09.0402) to “radio and television” (09.0701), the student loses Perkins Loan eligibility because the first four digits no longer match (09.04 and 09.07).
- Schools may use the remaining portion of their institutional revolving funds to award eligible grandfathered students. ED will provide additional guidance about estimating funding levels at a later date.
- Schools may increase Perkins Loan award amounts to borrowers for the 2015-2016 award year, provided the school made at least one disbursement of the loan prior to October 1, 2015. On or after October 1, 2015, a school can only originate new Perkins Loans for grandfathered students under the conditions described in DCL GEN-15-03.
NASFAA recently asked ED for clarification on two provisions outlined in the Q&A: the consideration of subsidized loan eligibility when calculating a Perkins Loan award and the suggested award year used in awarding priority groups (Qs #3 and #7 in the Q&A). We will keep you posted via Today’s News when we receive clarification on these issues.
ED is in continuing discussions regarding the wind-down of the Perkins Loan Program and expects to issue further guidance regarding Perkins Loan assignments and revolving fund issues in the coming months. NASFAA has encouraged ED to develop procedures that provide maximum flexibility to institutions and reimburse institutions for both institutional contributions and unreimbursed Perkins Loan cancellations.
In the meantime, NASFAA will continue to cover any developments as we approach September 30, 2015.
Publication Date: 6/15/2015