A Perkins Loan borrower may have all or part of his or her loan cancelled for certain employment in teaching, military service, law enforcement and additional service fields. When a qualifying borrower cancels their Perkins Loan Debt, institutions are reimbursed for the principal and interest cancelled.
The Consolidated Appropriations Act, 2018 (Pub. L. 115-141) enacted on March 23, 2018 appropriated funds for Fiscal Year 2018 for the Campus-Based programs. Pub. L. 115-141, but did not allocate funds for 2016-17 Federal Perkins Loan service cancellation reimbursements. As a result, there will be no reimbursement payments issued this year. Schools are not permitted to use funds from the Revolving Fund to reimburse themselves for cancellations and must still offer and apply applicable cancellations to borrowers.
According to a recent electronic announcement, Federal Student Aid will calculate the 2016-17 reimbursement payment for which an institution would have been eligible to receive using one of two processes based on the date the loans were originally made.
For cancellations on loans made prior to July 1, 1972, reimbursement is an institution’s portion of principal and interest cancelled on loans made prior to July
1, 1972 under the National Defense Student Loan (Defense Loan) Program. This portion is calculated using the required matching percentage institutions contributed for Defense Loans prior to 1972, which is approximately 10 percent for each institution that cancelled loans in this category.
For cancellations on loans made on or after July 1, 1972, reimbursement is both the federal and institution portions of principal and interest cancelled on loans made on or after July 1, 1972 under the National Direct Student Loan (NDSL) and the Perkins Loan programs. Institutions are entitled to reimbursement of the total amount cancelled.
Both reimbursement calculations are based on 2016-17 information reported on the 2018-19 Fiscal Operations Report (FISAP) (Part III, Section A, field 35 for the Defense Loan Program and fields 36 through 48 for the NDSL and Perkins Loan programs).