ED Announces More Policies for Making Some Perkins Loans after October 1, 2015

February 2, 2015 · by mlivolsi · Spark Notes

Prepared by:  Harrison Wadsworth  (hwadsworth@wpllc.net)

The Department of Education’s Office of Postsecondary Education on January 30th issued a Dear Colleague letter that explains how the “grandfathering” of Perkins Loans to current borrowers may work should the program’s authority wind down on October 1, 2015.

The letter states that students who borrowed Perkins Loans on or before the 2014-15 academic year can keep borrowing Perkins Loans for five years or until they complete their program of study.  The Higher Education Act includes a paragraph allowing for the grandfathering of existing students, although the Department has taken a rather restrictive interpretation of that provision.  Still, it does mean that some students will be able to access low-cost Perkins Loans until they graduate, even if the program starts to wind down.

It is important to note the context of this letter.  This and other announcements are taking place because Congress has not completed the process of reauthorizing the Higher Education Act and has not decided if it will extend the Perkins Loan Program as has been done repeatedly since the program was created in 1958.  COHEAO is aware that many members of Congress support the program, and its fate has not been decided.  It is up to Congress to make that decision.  At this time the reauthorization is still pending, so the Department has decided it is prudent to plan ahead just in case. 

Notably, the Department has repeatedly said that it will consider the Perkins Loan Program to be extended if Congress passes a blanket extension of all the programs that are expiring on October 1, unless Congress specifically says not to.

COHEAO is continuing its energetic work in Washington in support of the program as well as its grassroots initiatives.  Delegates at COHEAO’s Annual Conference last week made 60 visits to Congressional offices supporting Perkins and the Campus Flex proposal.  More information about grassroots actions and Campus Flex can be found on the COHEAO website, www.coheao.org.   COHEAO urges all supporters of the Perkins Loan Program to let their Representative and Senators know as soon as possible.  Ideas on what to say and more information can be found on the website.

The Department’s January 30 announcement narrowly deals with the grandfathering provisions and says more guidance on how a wind-down would work, if there is one, will come later. Institutions are especially interested in what might happen to the institutional share of Perkins Loan revolving funds if the program is closed.  The Department has not said.

The  letter repeats an announcement made at the December 2014 Federal Student Aid conference: Loans made for the 2015-16 academic year can have second disbursements made as long as the first disbursement takes place before October 1, 2015, even if Congress has not acted.

The Dear Colleague says Perkins loans can be made even longer as long as:

  • The school made at least one Perkins Loan disbursement to the student on or before June 30, 2015.
  • The student is enrolled at the same institution where the last Perkins Loan disbursement was received. For example, a student who received a Perkins Loan disbursement for enrollment at School A, and then received a Perkins Loan disbursement for enrollment at School B would be considered to be an eligible grandfathered borrower at School B, provided all other conditions are met, but not for a subsequent enrollment at School A.
  • The student is enrolled in the same academic program for which the student received his or her last Perkins Loan disbursement. We consider an academic program to be the same program 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 program for which the student received his or her last Perkins Loan disbursement.
  • While the law provides for this limited “grandfathering” continued eligibility for Perkins Loans “as may be necessary to enable students . . . to continue or complete courses of study,” many of these grandfathered students could have their need met by a combination of other student aid and thus will not need a Perkins Loan to “enable [them]…to continue or complete [their] courses of study.” Therefore, a Perkins Loan can be made to an otherwise eligible grandfathered student to meet all or some of the student’s unmet need only after the student has been awarded all Direct Subsidized Loan aid for which the student is eligible.

The Dear Colleague letter is posted on the Office of Federal Student Aid’s IFAP website: http://www.ifap.ed.gov/dpcletters/GEN1503.html



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