Dear Colleague Letter Explains New Conditions for Awarding Perkins Loans
By Joan Berkes, Policy & Federal Relations Staff
The Department of Education on Wednesday released Dear Colleague Letter (DCL) GEN-16-05, which summarizes the changes made to the Perkins Loan Program by the Federal Perkins Loan Program Extension Act of 2015.
The Act extended the Perkins Loan Program through September 30, 2017, but also made significant changes to the program. These changes replace the program wind-down conditions imposed by prior law, and, thus, DCL GEN-15-03, which set out those conditions, is superseded by GEN-16-05.
Essentially, the previous grandfathering provisions for undergraduates as outlined in prior guidance are gone. This new DCL replaces that guidance.
The Act allows institutions to make Perkins loans to any undergraduate student through September 30, 2017, but the conditions under which the loan may be awarded differ according to whether the student has any outstanding balance on a prior Perkins Loan made by the student’s current institution. The letter uses “current undergraduate student” to mean a student who has such an outstanding balance, and “new undergraduate student” to mean a student who does not.
The date the student enrolled in the institution is not a factor. Whether the student received a loan at another institution is not a factor: An undergraduate borrower with an outstanding balance on a Perkins Loan received from a different school can still be considered a “new” Perkins borrower at the school the student is currently attending.
The difference in treatment between undergraduate students who have an outstanding balance at that institution and those who do not is in the requirement to determine Direct Loan eligibility before awarding the Perkins Loan:
- Before awarding Perkins to an undergraduate borrower who has an outstanding balance at that institution, the institution must take into consideration any subsidized Direct Loan for which the student qualifies (whether or not the student actually accepts the Direct Loan).
- Before awarding Perkins to an undergraduate borrower who has no outstanding balance at that institution, the institution must take into consideration both subsidized and unsubsidized Direct Loans for which the student qualifies (whether or not the student actually accepts the Direct Loan).
Loans may be awarded under these new conditions for the entire 2015-16 award year (assuming the student is still enrolled at the time the loan is awarded).
For graduate students, Perkins Loans may be awarded only through September 30, 2016, and the conditions under which Perkins may be awarded are more similar to the previous guidance. An institution may award Perkins Loans to a graduate borrower who received a Perkins Loan prior to October 1, 2015, if the student received his or her most recent Perkins Loan from that school, for the same program. The DCL details the conditions under which the student is considered to be in the same program.
The DCL also explains new counseling requirements for Perkins borrowers.
Publication Date: 2/18/2016
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