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The fate of the Federal Perkins Loan program has been on shaky ground for some time. Congress quit appropriating new funds for the program years ago and more recently stopped providing reimbursements for loan cancellations. President Obama proposed a major overhaul of Perkins that Congress has so far rejected. Several programs authorized by the Higher Education Act (HEA)—including the Perkins Loan program—were slated to expire on September 30, 2014, but received an automatic one-year extension to September 30, 2015.

On January 30, the Department of Education issued a "Dear Colleague Letter" (GEN-15-03) warning institutions participating in the Perkins Loan program of its potential demise if Congress does not act to extend it. The letter provides guidance about the limited circumstances under which schools could continue disbursing loans to certain students on or after October 1, 2015:

  • No loans could be made to new borrowers after September 30, but if the first disbursement of a loan for the 2015-16 award year was made prior to the deadline, remaining disbursements would be allowed on or after October 1.
  • New loans could still be made to certain students for up to five years to enable those who received loans for award years that ended before October 1, 2015, to continue or complete courses of study. The specific circumstances of when subsequent loans would be allowed are detailed in the letter.

While the letter closes with a promise to provide additional guidance on the wind-down of the Perkins Loan program and the disposition of existing revolving funds, this may be premature. Congress does not appear to be on track to complete HEA reauthorization this year and is likely to pass an overall extension of authority for all covered programs to fill the gap. This has been the practice in the past. The ultimate fate of the Perkins program will probably be settled as part of HEA reauthorization rather than before.


Liz Clark

Vice President, Policy and Research


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