Extension of the Federal Perkins Loan Program

ED recently posted GEN-16-05 describing the new Perkins requirements under the extension of the Federal Perkins Loan Program. The Perkins Loan grandfathering provisions have been eliminated and established new eligibility requirements for undergraduate and graduate students to receive Perkins Loans.

Under the new rules, a school can make Perkins loans to undergraduate students through September 30, 2017. When awarding Perkins loans the school has to make a distinction between those who have an outstanding Perkins loan from the school (current Perkins borrower) and those who do not (new Perkins borrower).  For those with outstanding Perkins Loans from the school, the school has to award all Subsidized Direct Loans before awarding Perkins. For those without outstanding Perkins Loans from the school, the school has to award all Subsidized and Unsubsidized Direct Loans before awarding Perkins. 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 full 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.

In addition, 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.

Under the new rules, a school can make Perkins loans to graduate students through September 30, 2016. In order to receive Perkins funds, a graduate student had to have received a Perkins Loan before October 1, 2015, received their most recent Perkins Loan from the current school and be completing the academic program for which they received their most recent Perkins Loan. Ed considers 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 addition, 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.

Finally, a school must provide some additional 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, 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, 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.

For more information about the extension of the Perkins Loan Program, click here: http://1.usa.gov/1TLoKJN

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