Two-Year Extension of the Federal Perkins Loan Program
The initial wind-down of the Federal Perkins Loan Program, per section 461(b)(2) of the Higher Education Act, included a narrow “grandfathering” provision that allowed schools to issue Federal Perkins Loans to certain students for up to five additional years (through September 30, 2020). This grandfathering provision further enabled students who received loans for award years that end prior to October 1, 2015 “to continue or complete courses of study.” The most recent extension has eliminated these grandfathering provisions.
Further, a letter from Lynn B. Mahaffie, Deputy Assistant Secretary, Policy, Planning and Innovation in the U.S. Department of Education’s Office of Postsecondary Education provides the following guidelines.
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 Unsubsidized Stafford Loan aid for which the student is eligible.|
|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 her most 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 her most recent Perkins Loan.|
Additional provisions of the Extension Act with regard to the disposition of schools’ Perkins Loan Revolving Funds will likely be released in forthcoming Dear Colleague Letters. CapinCrouse will keep you updated as this additional information becomes available.
We can also help you set up the necessary systems and controls to comply with these changes. If you have any questions or would like to learn more, please contact partner Fran Brown.
Federal Perkins Loan Liquidation Procedures