Publication Date: February 17, 2016
Subject: Extension of the Federal Perkins Loan Program
Summary: This letter provides information on the extension of the Federal Perkins Loan Program by the Federal Perkins Loan Program Extension Act of 2015.
This Dear Colleague Letter (DCL) notifies schools that the Federal Perkins Loan Program Extension Act of 2015 (the Extension Act), enacted on December 18, 2015, extends the Perkins Loan Program through September 30, 2017. This DCL supersedes DCL GEN-15-03.
AUTHORITY TO MAKE LOANS
In general, the Extension Act eliminates the Perkins Loan grandfathering provisions that the Department provided guidance on in DCL GEN-15-03. The Extension Act establishes new eligibility requirements for undergraduate and graduate students to receive Perkins Loans. The grandfathering guidance is no longer applicable to the Perkins Loan Program.
Per the changes in the Extension Act, effective December 18, 2015, schools participating in the Perkins Loan Program may make Perkins Loans as specified below:
|A school may make Perkins Loans through—||To an—||Who, on the date of disbursement—||If the school has awarded the student—|
|September 30, 2017||Eligible current undergraduate student||Has an outstanding balance on a Perkins Loan made by the school.||All Direct Subsidized Stafford Loan aid for which the student is eligible.|
|September 30, 2017||Eligible new undergraduate student||Does not have an outstanding balance on a Perkins Loan made by the school.||All Direct Subsidized and UnsubsidizedStafford Loan aid for which the student is eligible.|
Awarding Direct Subsidized and Unsubsidized Stafford Loans - An undergraduate student who was awarded a Direct Subsidized Loan and/or a Direct Unsubsidized Loan can decline one or both of the loans (or request a lesser amount). However, the student’s Direct Loan eligibility amounts must be included in the calculation of the undergraduate student’s Perkins Loan amount, regardless of whether they actually borrow that full amount.
Perkins Loans That Have Been Consolidated - When a Perkins Loan is consolidated it is paid in full by the Consolidation Loan. An undergraduate student who has consolidated his or her Perkins Loans does not have an outstanding balance on a Perkins Loan, and is therefore treated as a new undergraduate student.
Subsequent Disbursements for Undergraduate Students - If an eligible undergraduate student borrower receives a disbursement of a Perkins Loan after June 30, 2017, and before October 1, 2017 for the 2017-2018 award year the student may receive any subsequent disbursements of that Perkins Loan.
|A school may continue to make Perkins Loans through—||To an—||If the graduate student—||And the new Perkins Loan will—|
|September 30, 2016||Eligible graduate student who has received a Perkins Loan before October 1, 2015.||Received his or hermost recent Perkins Loan from the school, for enrollment in an academic program at the school.||Enable the graduate student to continue or complete the academic program for which the student received his or hermost recent Perkins Loan.|
Subsequent Disbursements for Graduate Students - If an eligible graduate student borrower receives a disbursement of a Perkins Loan after June 30, 2016, and before October 1, 2016, for the 2016-2017 award year, the student may receive any subsequent disbursements of that Perkins Loan.
Graduate Students Continuing or Completing an Academic Program - We consider a graduate student to be continuing or completing the academic program for which the student received his or her most recent Perkins Loan only if the first four digits of the program’s Classification of Instructional Program (CIP) code are identical to the first four digits of the CIP code for the academic program for which the student received his or her most recent Perkins Loan.
In the case of graduate programs with different degree objectives, a graduate student meets the eligibility requirement above if the graduate student:
Received his or her most recent Perkins Loan for enrollment in a program with one degree objective (e.g., masters);
Then enrolled in a program with the same CIP code (the same first four digits of the CIP code); and
Was enrolled in a new program that leads to a different degree objective (e.g., Ph.D).
In addition to the disclosures required under 34 CFR 674.16, under the Extension Act, a school must provide the following disclosures to each Perkins Loan borrower before it makes a first disbursement of a Perkins Loan:
A notice and explanation regarding the end to future availability of Perkins Loan Program loans;
A notice and explanation that repayment and forgiveness benefits available to Direct Loan borrowers are not available to Perkins Loan borrowers;
A notice and explanation regarding the borrower’s option to consolidate a Perkins Loan into a Direct Consolidation Loan, including any benefit of consolidation;
For current undergraduate borrowers (as described above), a notice and explanation providing a comparison of the interest rates of Perkins Loans and Direct Loans, and informing the borrower that the borrower has reached the maximum annual borrowing limit for Direct Subsidized Stafford Loans for which the borrower is eligible; and
For new undergraduate borrowers (as described above), a notice and explanation providing a comparison of the interest rates of Perkins Loans and Direct Loans, and informing the borrower that the borrower has reached the maximum annual borrowing limit for Direct Subsidized and Unsubsidized Stafford Loans for which the borrower is eligible.
NO ADDITIONAL EXTENSIONS
The Federal Perkins Loan Extension Act prohibits any further extensions of the Perkins Loan Program under section 422(a) of the General Education Provisions Act (GEPA). Schools may not make Perkins Loans to any student on or after October 1, 2017. However, as noted above, subsequent disbursements of a loan first disbursed to an eligible undergraduate after June 30, 2017, and before October 1, 2017, are allowed.
Distribution of Assets From The Federal Perkins Loan Fund
There are additional provisions of the Federal Perkins Loan Extension Act with regard to the disposition of schools’ Perkins Loan Revolving Funds. We plan to provide information on these and other important Perkins Loan Program issues over the next several months.
If you have questions about this letter, or additional questions about the extension of the Federal Perkins Loan Program, please contact Brian Smith at (202) 502-7551.
Lynn B. Mahaffie
Deputy Assistant Secretary for
Policy, Planning, and Innovation
Delegated the Duties of Assistant Secretary
for Postsecondary Education
U.S. Department of Education
Publication Date: 2/17/2016